by Charlie B

Created on: May 24, 2008   Last Updated: June 09, 2008

To most, the word budget conjures up images of financial distress. People who put themselves on a budget are inevitably in trouble. Despite the fact that most people would never consider the notion of budgeting until it was too late, the word budget is not synonymous with disaster. Nor does it mean that you have to suffer or go without. A budget can be a good thing. It is all about having the right attitude.

Financial control is a numbers game, but it also has a mind set factor. You have to manage the income and the expenses, but you have to approach it with the right thought process. The first step is to rethink the reason for a budget. A budget is not just a tool used to get out of trouble. If you implement a budget as a preventative measure, you will find that it will improve your life. Not instantly, but over time you will start to feel like you have more, even though you are spending less.

A few years back my co-workers and I got a cost of living raise of $3,000. At the time it was quite substantial. I was already on my budget so I implemented what I call my 10/10 plan on the added income while my co-workers just added the new income into their expense habits. The pay hike gave us all some added joy in our lives, but by the next year, most of them no longer realized the increase in their paychecks. They had absorbed the increase and had become accustomed to the higher income. I call this "living within your means". Those who live within their means are always on the edge of financial ruin. They live paycheck to paycheck. They do not anticipate or budget for life's surprises. And the one thing you can always count on is that when you least expect it and can't afford it, disaster strikes. Your spending has to begin below the level of your income and so does your budget.

Now that I have spent half of this article trying to convince you that you need a budget, lets get into setting one up. To begin a budget plan, you need to know the amount of income and the amount needed for necessities. Despite the number of things most people consider necessary, the list of necessities is limited to only three items. They are mortgage, food and utilities. These are the things that you need too survive. Everything else is extra and are candidates to be incorporated into your allowance. The extras are considered candidates because not all items you want in your budget will make the budget. I know that earlier I said that having a budget didn't mean going without, but you need

• 1
• 2
• Next Page >>