Personal Finances: Creating a Budget - Part 1

With the financial crisis around the globe in full swing, now more than ever it is time for you to create and maintain a budget for your personal finances. By doing so you will be able to pay off your bills, put away for retirement and avoid the troubles of financial debt. Personally I don't like the word, "Budget". Never have. But without a handle on your money you will probably wind up like most folks, living from paycheck to paycheck. Mismanaging your money can make you spin out of control to the point of feeling hopeless. That's because you are not in control when you don't have a clear plan for YOUR money. Take control of your life and YOUR money. Be smart. Heck it's your money and you've probably worked hard for it. There is hope and with a clear plan of attack, you will feel better about life, those around you, and even about yourself. Let's get started by analyzing your personal finances...



You need to know what your income is. So even if it is a rough estimate, say you are on commission sales, try to at least figure the minimum of what you could potentially make. If you make more, then you can deal with that later. So, right now make a list of your monthly income. Remember to include other forms of income which might include child support, alimony, and other side jobs.



Next, make a list of your monthly expenses. When you are calculating expenses, remember to include transportation such as gas (especially since it is on the rise), utilities, eating out or entertainment. Obviously you should have included in your calculating, rent or mortgage expenses, insurance such as car. To help you with this you can download our Budget Form.



It might be helpful to calculate your actual expenses by sitting down each night or ever-so-often and write down your expenses as they have occurred over the last several days. This will help you get a more accurate picture of your monthly expenses. You might be surprised how much you actually spend.



Another tip is to try to save your receipts. Just put them in a shoe box for the week and add them up over the weekend.



Now... Does your income cover all of your expenses? This is called "Cash Flow". If more is going "Out" than is coming "In", then "Houston - we have a problem". Hopefully, we can correct this with some adjustments. If you find that your expenses actually do exceed your income then you need to reduce your expenses.



Time to Adjust your Expenses... Depending how far off your monthly balance is (Income minus Expenses) it may be a matter of cutting back on your entertainment expenses or reducing your movie channels on your cable bill or even your cell phone. This may need to be a temporary plan so let's not look at this as the end of the world. Make the adjustment.



If however, the difference between what you spend is much larger than what you bring home, then you may need to consider selling your vehicle or possibly even make some different living arrangements. It's okay. Really it is. You will make it. Trust me, when you get control of your life you will feel better. I know, I have been there. The reason you may even feel sick, discouraged or depressed even is because you feel out of control.



Take control of your life right now by taking an active look at your personal finances. You will feel better I promise!



Visit Personal Finances Online for your Free 7 day eCourse on helping you get your finances in order. Also be sure to pick up your Free Simple One Page Budget



Stay tuned for Part 2.