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 A budget that works for you!
Some people make big mistakes when they try to budget. Let American Financial Health Center get you started on the right track. Follow these steps to create a budget you can live with:
1. Identify your values and goals
Budgeting is about what matters to you. Even before you add up where your money is going, you need to decide what you want your money to do. Start by answering these questions:
- What do I want my money to do for me in the future?
- What do I want my money to do for me now?
Ask yourself about the future—“When do I want to retire?” “Do I want to help the kids with college or go to school myself?” “Is it important to me to own my home?”
Then think about your spending right now—for transportation, entertainment, food, clothes, insurance, health care, and so on.
As you can guess, spending money on all the things you want right now may take away from your goals for the future. Can you identify which items are the most important to you? Are there things you can live without now in order to help your future dreams come true?
For families it is important to have at least one person incharge of budgeting, and reviewing account transactions. It is best if both participate.
Talk about your financial goals with the people who will share your budget. Find out what matters to them. It will be difficult to make your budget if your values and goals are different. Keep talking until you can agree on what you want your budget to do for you.
2. List your income
Once you identify your goals, list your streams of income. Add up all the money you earn in a typical month, then subtract what you pay in taxes and deductions. This is your net income. If your income varies from month to month, be on the safe side—put down a number that is less than you usually make. It is always best to underestimate your income.
3. Break your expenses down
Next, write down how much you’re going to spend on what. When guessing what you’re going to spend, it is always better to overestimate. You have two types of expenses: fixed and variable. Fixed expenses are the same every month. Your house payment, car payment, insurance, and (ideally) retirement and savings contributions may be fixed expenses.
Variable expenses change from month to month. These expenses could include medical or dental bills, credit card payments, what you spend on gifts, entertainment, eating out, and more. Variable expenses are usually the areas where you can save the most.
Categorize all your expenses and add them up together. It helps to go through your bank and credit card statements for the past few months to get an accurate picture. (To print a list of typical expenses, with blanks to fill in yourself, click here.)
4. Math you can do
Now subtract the total of your expenses from your net income.
IN THE RED: If you ended with a negative number, your expenses exceed your income. You need to take immediate action to protect your financial health. Perhaps you can downsize your home, eat out less, or take the bus. Perhaps you can find an additional stream of income, like a second job. For tips on making your expenses less than your income, see the SAVINGS section.
IN THE BLACK: If you ended with a positive number, congratulations! You are living within your means. Now you should evaluate if you are saving enough to accomplish your future goals. For tips on saving even more, see the SAVINGS section.
5. A budget you can live with
Remember, a budget has to be flexible. Unexpected costs will come up. New ways to save may work better than you hoped. The key is to look at your budget often to make sure your spending lines up with your values and goals.
Budgeting Tools
Now that you have your budget figured out there are some financial budgeting tools avaliable some of which are free of charge
1. Mint.com (Free)
Why I like it? View all accounts in one location. Organizes all of my transactions in budgeting categories I create. Mint was reciently purchased by Quicken and has many great features similar to quicken products.
More about Mint.com
2. Quicken ($50-$100)
A must have for organizing home and business budgeting. Quicken has many variations of is product that will work well with any family. Like its partner mint.com you can connect and organize multiple accouts, but unlike mint.com you install and manage quicken on your home or business computer.
Overview(From Mint.com)
Helping You Do More with Your Money
At Mint, we believe that money is for living. That’s why we’ve created the simplest and most effective way to manage, save and grow your money... and why Mint.com is free.
And with our NEW Goals feature, you can set and track your progress towards goals—like buying a house, saving for retirement and getting out of debt—or create your own savings goals. Get customized advice to help you achieve your dreams faster.
America’s #1 online personal finance service
Over 1 million people already use our online money management and budgeting software today, and we’re adding over 3,000 users every day. Mint.com is tracking $175 billion in transactions, $47 billion in assets and has identified more than $300 million in potential savings for its users. What our users say about us.
Top rated software – beating out other services charging $100’s.
Mint.com has been named the best online personal finance tool by Money Magazine, PC Magazine, and is PC World’s Editor’s Choice. Read the reviews or the full list of awards.
Mint.com does the bookkeeping
In five minutes or less, you’ll see where you’re spending your money, understand how your investments are performing, and set up realistic budgets. Set up email and SMS alerts and you’ll be automatically updated whenever there’s an important change in your finances. Only Mint.com finds you personalized ways to save money, using patent-pending software which analyzes your current spending. The typical Mint.com user finds hundreds in savings in their first visit. Learn more about our award-winning service.
Secure and anonymous
Mint.com uses bank-level data security verified by Verisign and TrustE. You’re anonymous on Mint.com; you don’t share your name, address, social security number or account numbers. You can save money — but you can’t transfer money — using Mint.com. In fact, with Mint.com’s automatic email and SMS alerts, you can increase your online security by learning of - and acting on — any suspicious activity in any of your accounts more quickly. Learn more about how Mint.com keeps you safe.
We make money by saving you money
If you act on one of Mint’s personalized savings recommendations, we sometimes — but not always — earn a nominal fee. But you can always count on unbiased advice.
While Mint.com is fresh, our company is well-seasoned
Mint is led by an experienced team including industry veterans drawn from the ranks of Charles Schwab, eBay, Expedia, Intuit, PGP and other leaders in the finance, security and software industries. We’ve attracted funding from top tier venture capital firms whose past investments have included Google, Intuit, eBay, PassMark Security, PayPal, Yahoo! and others. Learn more about our company.
More about Quicken
View your accounts all in one place (From Quicken.com)
Organizes your finances by bringing your online accounts together — including checking, savings and credit cards. Avoid the hassle of going to multiple websites. Now you can see it all in one place with just ONE password. Access over 6,700 banks, brokerages and other financial institutions — including PayPal.1 See it
See where your money’s going
Quicken Deluxe shows you what you have coming in, going out, and most importantly, what’s left over to spend or save. Check in anytime to see exactly where your personal finances are for the week, month or year. See it
Never miss a bill
See what bills have already been paid, what’s coming up, and if you have enough left in your accounts to cover them — all in one convenient place. Set reminders to pay bills on time and instantly check the status of past bills.
See it
Watch your savings grow
We make it easy to get on – and stay on – a budget. Quicken’s Spending Planner automatically sets up budget goals based on your historical spending. You can easily customize your plan, and Quicken then tracks your progress.
Quicken Deluxe can also help you create customized plans to reduce/eliminate debt – and to save for a house, college, retirement or large purchase. See it
Simplify taxes with TurboTax2
Quicken Deluxe pairs perfectly with TurboTax to save you time. Easily export your data directly to TurboTax for fast and accurate tax preparation.2
Enjoy free support when you buy, install or upgrade Quicken3
If you need help purchasing, installing or upgrading your new Quicken personal finance software, free phone support is available. For more information, visit our Help & Support site.3
100% Satisfaction Guarantee
If you’re not 100% satisfied, return your Quicken Deluxe 2010 personal finance software with your dated receipt within 60 days of purchase for a refund of the purchase price (return shipping and handling charges not included).
Easily import from Microsoft® Money4
If you’ve been using Microsoft Money personal finance software, we can help you transfer your valuable financial information to Quicken.4 With our easy-to-use Data Converter tool, you’ll be up-and-running with Quicken in practically no time.
Recommended books:
The Pocket Idiot’s Guide to Living on a Budget by Peter J. Sander and Jennifer Basye Sander
Recommended web sites:
mint.com
Quicken.com |
