How to manage your money with budgeting tips.

Posted by Gregory E. Rouse

May 29, 2009

by Greg Rouse

Money is a funny thing, if you don’t decide beforehand where you want it to go, it will still go. An old friend mine use to say, “money is like gas it expands to fill the space”. If it’s a small space it fits that, if it’s a large space it fits that.

There always seemed to be more month than money and he never seemed to have extra. Even at the times in his life where he lost income, he always seemed to make it work or just barely get by.

Over the years because of a unique position I was in, I had the opportunity to look at a lot of people’s finances and one thing I realized is that it doesn’t seem to matter how much money you make. I would see the family making $20-30,000/yr doing just fine and then the family making $200-300,000/yr getting behind each month OR the reverse, with the family making $20-30,000/yr getting behind each month and then the family making $200-300,000/yr doing just fine, along with every income level in between.

So what this told me is that it doesn’t matter what you make, it matters more how you manage what you make.

“If you fail to plan, you plan to fail”. A budget is basically a plan for your money, so let’s see how to plan.

To follow a budget, you need to first establish where you are. So a budget that has both an “actual” and “planned” section is what you re after. What you need to do is list what you’re currently spending and then right next to it list what your budget goals are or the budget you want to follow.

Some points to remember:

Every cent should be allocated! Your budget should always balance. If not, the extra will disappear or “expand to fill its space”.

Have an item called “spending cash”, where you can spend the money on anything you want and it’s not accountable to any other budget item. Most people will spend it anyways, so add it to your list and that way you won’t be surprised.

Now, if you knew you only had $5 most people would only spend $5. Personally, there’s been times in my life when the budget only allowed $5, so my wife got $2.50 and I got the other half. But there’s also been times when the budget allowed for hundreds of dollars.

The key here is to not be surprised at the end of the month and know what you’re going to spend beforehand.

Budget for a specific period of time (such as weekly or monthly) according to your pay schedule. If income and expenses vary from week to week or month to month, prepare a new budget each and every pay period, until you can become stable.

Remember “If you fail to plan, you plan to fail”.

About the Author:

Are you feeling the stress of finances? Find some relief, visit this frugal living skills blog for simple methods to cut costs with all kinds of budgeting tips. Also, find cheap recipes and how to feed a family of 8 for under $5.

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How to manage your money with budgeting tips.

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