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One of the most powerful tools in any personal finance arsenal is a budget. Unfortunately, many people make it much more complex and difficult than it needs to be. As far as budgets go, simpler is better!

START WHERE YOU ARE

The sooner you take advantage of a budget, the sooner it will start working for you. A budget is not something to begin "when I am organized." This is a tool to help get you organized.

First, get a list of what you have spent money on in the last month, or whatever time frame you can find. Many banks offer online banking, and then you can view all of those transactions online. Otherwise, your monthly statement will usually list all transactions for the last period.

Make a list on a blank sheet of paper of some basic categories for what you spend money on. I recommend somewhere between 10 to 15 categories. There is a list to start you off in the sample budget form below.

Go down your list of transactions on statements and mark them with a category. Don't worry so much about classifying everything right down to the dollar. Don't worry about splitting one purchase between categories either. We want this to be EASY. For instance, if you go to WalMart and buy mostly food, but also spend a little on clothes, just keep it all under food.

Tally up the total you spent last month for each category. Then think about what's going to be different this month. Perhaps you have some plans that will create more spending in the entertainment category. Maybe you want to budget a little extra for Auto because you need an oil change and gas prices are going to be a little higher too.

Write each category and what you plan to spend this month on a sheet of paper, or in a spreadsheet program. You could even use something free like Google Docs and create a spreadsheet that way. This is your first budget, and once you think it's reasonable, don't change it. Here is an example format for the budget.

BUDGET____ACTUAL__CATEG ORY

$1700_____$0______His_Paych eck
$1700_____$0______Her_Paych eck
___________________________ ___
$3400_____$0______Total_Inc ome

$500______$0______Food
$1020 _____$0______Home
$750______$0_ _____Auto
$400______$0______Uti lities
$200______$0______Medica l
$100______$0______Savings
$200 ______$0______Debt_Payments
$30 _______$0______Pets
$100______$ 0______Entertainment
$100______ $0______Clothes
_______________ _______________
$3400_____$0___ ___Total_Expenses

UPDATE IT WEEKLY

Update your budget weekly. Later on, you can do it more or less often. Make this something you do at a certain

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