by Chantel Rhodes

Created on: September 25, 2008   Last Updated: December 08, 2009

Budgeting takes some discipline, but with a few little tricks it can be easy. I began by using some of the ideas presented in Steve and Annette Economides' book 'America's Cheapest Family Gets You Right On the Money'. Once I got a good feel for where I was spending and saving and where I really wanted to spend and save, I made some changes that have worked well for me. You can use a budget, no matter what your income or financial challenges. As long as some money comes in and some goes out, a personalized budget will work for you.

First, you have to get an idea of where your money currently goes. If you have no idea where your money goes, save your receipts for two weeks to a month, then calculate what you spent on what kinds of things. If you think you have a pretty good idea where you spend, then make a list of the categories that make up your typical spending. Avoid using the category "miscellaneous," unless you are specific in what items go into it. It can be a black hole that defeats your entire purpose, if you are not careful. My "miscellaneous" category was for postage, dry cleaning and haircuts. These were small expenses that didn't really fit anywhere else and were too small to itemize on their own. If you can't be limited and specific, then eliminate this category to begin with. You can add it later, once you get into a routine you are happy with.

I used a paper ledger, since I am a very visually oriented person, so I could see at a glance what my balance was in any given category. It's also portable and requires no electricity or Internet connectivity to keep updated. You can use your favorite personal financial software or a notebook. But the idea is to be able to see each category. At the top of each page I listed the category and the amount I thought I spent or would spend (or save) towards that category each pay period.

I used the following categories:
Charitable donations (10%)
Rent
Nest Egg savings
Bills (these can be itemized specifically if you want: phone, cell phone, cable, electricity, gas, etc.)
Credit Card (if any)
Food (groceries and regular lunch expenses)
Vacation
Leisure (date expenses, books, magazine subscriptions, movies, movie rentals, restaurants)
Miscellaneous (postage, haircuts, dry cleaning)
Pet expenses
Medical/Dental (co-pays, prescriptions, etc.)
Transportation (gas, insurance, maintenance, bus fares, etc.)
Kids' Expenses (lessons, girls' camp, scouts, etc.)
School Expenses (fees, books, registration, etc.)

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