by William Addison

Created on: November 09, 2009

Many struggle with a personal budget, and find that preparing a budget is too much work and is often inaccurate due to missed items or unexpected expenses. However, one budget works without fail. The secret to this type of budget will be explained in a few short paragraphs, but it must be said that the quality and effectiveness of a budget is wholly dependent on the accuracy of its content, and the budget preparer's ability to spend money.

I'll bet that last bit did not sound quite right for an article on budgeting. Follow here and allow me to explain the type of budget that never fails, and the process by which it is prepared.

A budget that never fails is called a zero balance budget. Your budget should be written for every paycheck, or for every billing cycle for most of your bills, which is usually per month.

In a zero balance budget, the income and outflow sections are equal, which means they are balanced. In this budget, you simply list all sources of income for a period and add them up. This is called the income section of the budget.

That is the easy part.

Next, list everything you will spend money on during the same period and add this list up. This is the outflow section. If this number is larger than income number, your next task will be to reduce some of your spending. If it is smaller than your income then congratulations, you can put this money in your savings account. Add "savings" as a line item on the outflow section so the budget will balance.

As long as your income and outflow amounts are the same, your budget is a success. It cannot fail, because you have already spent the money in the budget. You cannot spend more than you have in income, so failure is impossible.

When people ask why their budget failed, they are really asking, "Why did I spend more money than I said I would?"

A budget is the way you control you money. You tell it where to go, and you get to decide what you will buy with it.

A great way to ensure that you will only spend the budgeted amount for each outflow item is to put the cash in an envelope labeled for that item. When the money is spent from that envelope, you cannot spend any more money on that thing until your next budget.

Remember that budgets do not fail, and that you have control of money. People with low incomes who can handle their money this way can feel empowered, confident, and even wealthy.

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