YOU on a Budget

Individualized savings in America has reached record lows in recent years and the downward spiral seems to continue with the tough economy. However, it is the benchmark to securing a stable financial future.

Investing a small amount of time by examining your income, expenses and creating a budget is an excellent way to begin saving money.

Many people cringe when they hear the word budget. Just the mere mention of the word conjures up many negative thoughts.

Think of it as a plan (financial plan), to meet your monetary goals. Creating a budget is the first giant step toward long-term financial security.

Some experts suggest creating a budget once a year to discover where unnecessary purchases are being made, then adjusting spending patterns accordingly.

If you discover a certain amount of money can be saved per month, have it drawn from the account directly and placed into some type of savings account or retirement fund. Saving money automatically is easy and reassuring.

The word budget is derived from the French word "bougette," which means purse. It refers to an organized list of planned income (inflow), and expenses (outflows) for the purpose of making ends meet.

Coming in under budget would be the ultimate goal. That is the greatest benefit of creating a budget, you can cut back on unnecessary spending to begin saving money instantly.

There are many tools that can be utilized for creating a budget like:

• Accounting software like Quicken or Microsoft Money;
• A spreadsheet like Excel or Lotus;
• Free online budget planner sites like Mint;
• Notebook and pencil.

Set goals for building savings. Identify the reason(s) for creating a budget. Some lists of motivations may be:

• House purchase or pay off a mortgage;
• Retirement;
• College for yourself or your children;
• Make ends meet;
• ______________________________ (fill in the blank).

• Calculate your monthly earnings. Identify all sources of income, i.e., salary, child support, interest bearing accounts and dividends.
• Make a list of all of your monthly expenses. Expenses can be tallied by examining your check register, debit and credit card statements.
• Subtract expenses from earnings and compare. This will tell how much you can expect to save at the end of every month. If your expenses exceed your income, you may be headed toward a financial catastrophe and credit card debt may be the culprit. Taking immediate action to pay off those debts can save hundreds, if not thousands of dollars annually on interest fees alone.
• Ammend if necessary. If your expenses exceed your income, rework your budget. Take a hard look at every expenditure and make necessary cuts.

Make adjustments to reflect goals toward saving and debt reduction. Determine where you are willing to make sacrifices to save and then pay more than the minimum on outstanding debts.

Test your budget. Once you have developed a plan, try living within those constraints for a while to get a feel for how it will work out.

Review and evaluate. Is the budget working for you, or are you having trouble sticking to it? Make adjustments to the budget to get it to work for you. Never give up and continue to try until the system works. Your financial future depends on it!

Some advantages for being on a budget include:

• Establishing whether or not expenses surpass income;
• Forced to correct mismanaged finances;
• Gets everyone in the family on the same track.

• Create a budget at least once a year to learn where to curb spending;
• Eliminating credit card debt can save a ton of money;
• Revisit financial goals yearly since objectives may have been reached, or needs readjustment.