Living on a Budget

Financial services estimate that only 2 in 10 American homes are run on any kind of budget planning at all. Coupled with the statistics that show the extremely high levels of personal debt that American's carry and you can begin to see the value of living simply and within one's means. A budget is something that takes a little time to create, more time to perfect, and brings a lifetime of thankfulness, peace and wealth to follow.

Setting Up your First Budget

Likely as not, your first attempt at budgeting will not be completely successful. It is important to understand that and not be discouraged if you have to tweak the process after your first month or two and tweak it again later. The important thing is to stay true to the numbers you have written down for your expenses - all of them, and not cheat your way out of making this work.

Your first budget can be as simple or complicated as you like. There are even free budget kits online to help you get started. All budgets are simply a foreshadow or prediction of how money will flow into your life, and how money will flow out. Once you have decided to live by a budget and settle the small issues that arise when learning to live on one, you will quickly come to understand the simplicity of how to adjust it on the fly and make it work for you at all times.

Start by simply writing your income amounts at the top of a sheet of paper. If you are a dual-income family, you should write both amounts up here. Once all of the income is accounted for, you can begin to write down (and subtract from the income) the regular, monthly bills you have such as cable, car payments, gas for your vehicles and those fancy date-nights you and your spouse like to go out on once a week.

Continue to list everything that you spend money on on a monthly basis, not forgetting to save some money for yourself in an interest-bearing account, pay for clothing, gifts, those soccer lessons for your kid, set aside a little for personal money as well.

When you are done listing out the assets (income) and debts for your budget, you can start to live on it, making minor, "as needed" adjustments to it as you go. If you find yourself short on cash at the end of the month according to your budget, then you should shift money from somewhere else to cover it - if you find yourself with extra money not accounted for in your budget, then you should begin to pad your other budget items like savings, clothing, etc., or better yet, if you have any credit card debt or loans, send extra money to them each month to help them get paid off that much sooner.