Money Rewind: Are You Sticking to a Budget Yet?

Do you have more bills then money at the end of the month?  Having trouble paying down the mortgage, rent or groceries?  You are one of millions of people who have reached the end of their rope and need help.

Due to financial crisis from a job loss, unexpected expenditures or simple over spending, setting a realistic budget can create a sense of calm in what may otherwise be an urgent and out of control situation.

What is a Budget?

The online wikitionary.org describes budget as “an itemized summary of intended expenditure…”  The word is derived from the Old French bougette, literally meaning leather bag or wallet, the nature of its meaning has changed little since its first use in 1432.

The first step in creating your own budget is to track your spending.  To get a handle of your spending, gather all your bills. Be sure to include the big ticket items such as:

• Mortgage
• Electrical bill
• Water
• Groceries
• Insurance
• Credit card.

Do not forget about the smaller incidentals such as entertainment, movies or the early morning coffee.

Record each bill on a separate line in a simple lined school note book.  Fancier accountant books are available but are unnecessary.  For example, on the first line write 1) mortgage, or rent, and record the amount to be paid each month for your mortgage.  On the second line record, 2) electrical bill and continue until all the expenses are recorded.  Tally the amounts and you now have a simple estimate of how much is being spent every month.

The act of simply recording the amounts that are spent highlights where the money is going. 

Record Your Income

After documenting all of your expenses, record the income.  Below the list of expenses, register your income for the month.  Income will include your weekly pay checks and any commissions. 

Having more income than expenses results in a savings and any ‘extra’ money should be applied to the expense with the highest interest rate.

Paying Off the Bills

Finding more bills than income at the end of the month can be a shock.  Having a budget and recording all expenses can identify where you can trim your budget.  If your expenses exceed your income, start pruning with the incidentals.  Stopping for a cappuccino and a muffin can add up throughout the month and if you can apply this money toward an outstanding credit card bill then you will be further ahead in the long run.