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A budget can be a great thing. The first thing you need to do is make as much of your budget as possible automatic. As most recent personal finance books and articles point out you should pay yourself first. Save at least ten percent of your salary every pay period. Have it automatically deducted from your account or your pay check on the day you get paid then forget about it.

The most important thing after making your budget automatic is making goals. Make goals, if you have a great deal of debt sometimes it's hard to see that you are making progress but if set reasonable intermediate goals that will lead you out of debt that will help you psychologically see the progress you are making.

Next pay your bills. Pay the necessities first, mortgage, insurance, car payment, loans, food, and utilities along with any others that must be paid. Next pay your credit cards if you have several pay the minimum on all but one. Normally you would focus on the highest interest rate but if you have one you can pay off in one or two payments do that first then pay the minimum on the others. As you get out of debt don't continue to put things on the credit cards.

What you have left after paying your necessary bills and the variable payment bills like credit cards is the money that you must budget between pay checks. For day to day expenses if you are undisciplined pay in cash this will help you understand how much you are spending on a daily basis. If you are disciplined some credit cards offer online tools to help track expenditures find one and use it but limit its use to what you can pay off from pay period to pay period. Force yourself to stay within a set amount of money each pay period.

Paper budgets where you list out what you will spend each month almost never work. That's the reason you should make your budget automatic. At each pay period look at your account balances both bank accounts and credit cards. This can easily be done online. Pay any bills that will be due before the next pay period and follow the formula above. You won't have a formal budget but you will have a budget algorithm that will not only get you out of debt it will also have you saving money for future unforeseen problems.

Learn more about this author, Odin Kyle.
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