by Senile M. Ethane

Created on: July 12, 2009

You are thinking of starting a budget. But from what you have read so far, it sounds like a lot of work. And a lot of it doesn't sound like it will work for you. Well, it doesn't have to be anything more or less than what YOU need. And most articles about budgeting tell you that you need to set aside 10% for this or "enough to cover expenses for 6 months" and so forth, but nothing about the nuts-and-bolts about how to actually set up and use a budget.

This article will try to lead you through the actual steps of starting one kind of budget.

To start with, let's be clear about what a budget really is. It is simply a tool you can use that will provide you with the information you need in order to make informed and thus better decisions about your finances.

When most people hear the word "budget" their first thought is that it is something poor people use to help them scrimp and save. It's all about deprivation.

When I use that word I see it as a means of money management to organize and document my priorities, monitor my financial goals, and gather information for future reference.

The primary component of any budget is a bookkeeping system. That is, you need a way of adding and subtracting numbers and keeping various running totals. In its simplest form, this can be nothing more complicated than a loose-leaf notebook and a pocket calculator. In fact, until you get the hang of it, this is probably the best place to start.

Step 1 - preparation

Prepare a loose-leaf notebook. Each page should be ruled with a column at the left for a date. At the right prepare two columns, one for a transaction amount and one for a running total. Most of the space in the middle is for a description. At the top of each page write an "account name".

To keep things at their most basic, start with 3 accounts labeled, "Income", "Spending", "Bills" . The meaning of each account is flexible. It is whatever YOU define it to be.

Step 2 - gather information

You need to gather information before you can use it to make decisions. You could start by digging out old bank statements or simply make a lot of guesses. But why not just start from today and keep some records. A budget requires a degree of discipline, so at least once a week, record your actual financial transactions.

On the income page, record your paycheck, interest or dividends earned, and any other source of money you have received. Note the date, a description, the amount.

On the spending page, record your spending. Spending is initially

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