by Douglas Dunn

Created on: May 31, 2008   Last Updated: December 18, 2009

You have heard it said, to get control of your money you need to budget. You have heard the old adage to save for a rainy day. We have heard many ideas and theories about saving money over the years but it seems no one ever addresses how to budget our money so we can save for a rainy day. This may be because discussing budgets is about as much fun as crunching dry granola at five in the morning. I would like to share a few basics of budgeting so those who have not learned how in our schools and seminars will have a basic understanding of how to go about it.

First of all, there are two basic ways of coming up with a budget. Think of it like our political climate and compare the two methods to our two main presidential nominees. Obama wants to sit down with sworn enemies, have discussions and talks, and come up with solutions. McCain wants to let our enemies know we will not tolerate bad behavior and there will be consequences to not complying with mandates. Now let me explain how this relates to budgeting.

One method of budgeting requires that you keep a written record of all your expenses for a period of one or two months. This would include your daily cup of coffee or soda, the gas you put in your auto, the amounts you spend eating out and even the nail file you buy to trim your toenails. At the end of the record keeping period, you sit down with all your numbers and develop categories for all your expenses. With your numbers as a guideline you can come pretty close to what you spend on average each month for each category you develop. A budget is a flexible tool in the beginning, as you will think of more categories and sub categories as you go along. After a few months of keeping track of income and expenses and categorizing them you will have a realistic plan of where your money goes on a monthly basis.

There should also be a category in your budget for planned savings, either for retirement, slush fund, or emergency funds. This would make it an automatic process into which you would deposit money in those savings accounts. You may have to cut back in some areas to have money to spend or set aside in other areas. With a little massaging of the numbers, a little give and take, and some restrictions on your part, you should be able to stay on track with your spending and stick to the budget. This method is comparable to sitting down with your enemies, money and spending, and having discussions and talks about how you would like to see the relationship progress.

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