A Budget is not for Babies!

Most people do not have budget.

Budgets have really gotten a bad rap! The feelings that the word ‘budget’ evokes are usually negative and constraining. Budgets are usually associated with restricting the activities that are enjoyable. It does not have to be that way! Think instead, ‘spending plan’!

Income – expenses = Spending plan!

The calculations required is grade school math, therefore, everyone is qualified to make a spending plan.

The National Syndicated Radio Host Dave Ramsey recommends a zero based budget which means the income minus the expenses equals zero. He says to “spend every dollar on paper before the month begins.”

Budgets, AKA Spending Plans, can be written on paper, saved on a computer document or created in a computer software program. A great free online budgeting tool is available at http://www.mint.com/

It is important that all monthly expenses are covered by the income coming into the home. This will avoid the need to use credit card debt for basic living expenses. Credit should not be used to purchase items which you cannot afford!

If the expenses exceed the income, a deficit is present. The expenses must be reduced or income increased to balance the budget. If the income exceeds the expenses, this surplus allows additional savings or preparing for upcoming predictable expenses.

Predictable expenses are maintenance, holidays, bills or miscellaneous things that may not come due every month. A few examples would include Christmas, tires for the car, personal property taxes, and car insurance premiums. These expenses are not surprises but they can take the wallet by surprise!

Be prepared for these ‘budget busters’ by saving some money the expenses each month. Some things are not UNEXPECTED expenses is a Savvy Saver article that details a great method to be prepared for these kind of expenses.

Virginia Saves motto is ‘Start small, think big.’ Start small by creating a budget for you family this month! Think big. You may have to be creative to make all expenses to fit into that first budget.

Budgeting is the first step toward financial freedom! Will you take that step?