by Karen T. Sanders

Created on: March 26, 2009

Definition of a Budget

According to Merrium-Webster's online dictionary, a budget is "a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them b: a plan for the coordination of resources and expenditures c: the amount of money that is available for, required for, or assigned to a particular purpose".

That's a really long sentence to say that a budget is a list of all your incoming and outgoing money. The big question is why should you have a budget and exactly how complicated it is to make a budget. For me, understanding and completing a budget was simple. For my best friend, it was one of the hardest things she has ever done and I ended up sitting down with her and helping her figure it all out.

It surprises me how many adults have no idea what to do with a budget. I've heard so many people talk about how hard it is to make a budget or if they have a budget, how hard it is to keep to it. My philosophy is KEEP IT SIMPLE! I have read a few articles and even a few books on budgets and they always start off with telling you to keep tract of every dollar you spend for a week or month. Then they tell you that you need to understand how you spend to know how to make your budget. Some tell you that you have to cut back on all the pleasures in life and not spend a dime more than you absolutely have to. I'm not going to do that. Have you ever heard of KISS - Keep It Sweet & Simple? This is my version!

Guidelines of a Budget

There are a few basic steps of making a budget and a couple of intermediate ones. For anything more complicated I suggest finding an accountant as I have no knowledge beyond the basics.

Step 1: Make a list of all your bills

Do you have credit card bills, house payment or rent, car payment, car insurance, cell phone and house phone bills? How much gas do you use in a month? How much do you spend on food at the grocery store, at a restaurant, in fast food? Do you pay for internet or a gaming site? List anything and everything that you pay for every month. This is your monthly bills.

Example: My Monthly Budget
Rent - $635.00, Car Insurance - $90.00, Car Payment - $100.00, Cell Phone - $40.00, Internet/Cable/House Phone - $150.00, Gas - $100.00 - TOTAL: $1115.00

I'm luck in the fact that I have a roommate and she pays the electric, water, food (Food Stamps) and part of the rent. Also, I'm buying my truck from my brother, which makes my car

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