Budgeting For Idiots

I hope the title left a little intrigued as to what the topic is for today. Truth be told budgeting is the basis for a strong personal finance plan but why don’t we do it. Here are a few reasons:

“I let the bank budget my money for me”

“My broke uncle said that until the checks are gone I have money in my account”

“My wife handles the money”

“My husband handles the money”

“We don’t make enough money to budget”

So before you catch yourself quoting the above statements get out a pen and paper and follow these easy steps to budgeting (because you aren’t an idiot).

1. List your take home income at the very top of the paper (this is the net not the gross).

2. Under your income list your most important needs i.e. food, shelter, clothing, transportation.

3. Then list all the monthly bills (divided by amount of pay periods per month).

4. Yes. Dog grooming is a considered a monthly bill.

5. After listing all the bills that have to be paid divide the rest into different areas that are considered wants i.e. vacation, eating out, etc.

6. At the very bottom (when all the bills and wants are subtracted out) the number must be $0. If it is not $0 then find a place for the amount leftover.

This is considered a zero based budget. You must be (insert tag word) Intentional about your money. Each dollar must have a name. Don’t ever let money fall into what most would call a “slush” fund. As you begin to count your slush fund you will find that not buying drinks at Sonic and 7 Eleven could send your kids to college. Most importantly remember that budgets are static. You will not get it right the first time. Follow these easy steps and by the end you will be a Budgeting Aficionado.