What's a Budget Anyway?

A budget is simply a financial plan a way to see where your money comes from and what it's being spent on. By keeping track of where the money goes, you can make sure all your bills are being paid, and that you have some left for unexpected expenses and saving for the future.

How to Write a Budget

Different methods will work for different people. Some may prefer to have it all written out on paper. Some prefer an electronic spreadsheet. Still others like the envelope method. Whichever method works best for you, use it. A budget won't work for you if you're trying to conform to a method that doesn't suit your personality.

First Things First

The first step in writing a budget is to get all your paperwork together. You need to know how much you're bringing in (paychecks, child support/alimony payments, annuities, etc.) and what bills need to get paid each month. Write it all down. Think of bills that may not come every month but still need to be considered (taxes, water bill, etc.). Think about bills that are a little harder to define (food, gas, doctor bills and prescriptions).

Once it's all been written down, add it up. See the total amount that you bring in each month, and how much money is going out each month. For bills that don't get paid every month, take the total and divide it by how many months between payments (for example, a $600 tax bill that's paid every 6 months would have a $100 monthly expense).

How are your numbers? Is your income higher than your expenses? If it is, great! If it's not, check out the "Cutting Back" tab to get ideas on how to cut your bills.

Keeping Track

Once you've determined where your money has to go, come up with a way to keep track of it so you can make sure all your bills are getting paid on time each month. As stated above, there are different methods. Use the one that works for you. Some may try each one until they decide which one works best.

What's Left?

Once the bills have been paid, how much do you have left? This money should be divided up according to your needs and goals.