There are a few things in life that we all have in common.  Among those are the need for food and water, and something with which to trade for it.  Money.  Until our country collapses (Read the article 50 Facts About the US Economy That Will Shock You by Becket Adams) we have currency that we can trade for goods and services.

There are plenty of articles circulating in our electronic world that point out that Americans don’t pay attention to what they eat, and there are probably just as many that point out that we don’t pay attention to what we spend.

What do you do?  Do you really know what’s going on in your financial world?  It actually matters to you, and if you aren’t aware of what really matters to you, then you’re lost.

Your Budget (Yuck, right?  No, not so much.)

Let’s break this into a few categories.

Category 1:  The Revealed Budget, or the “Unplanned” Budget

This is where you start.  You need to simply look at what’s going on with your money, and write it down.  Write down what you make, subtract what you spend, and that gives you a Revealed Budget.  It’s a snapshot of your behavior.  It shows you what you’re spending your money on.  Don’t worry about the facts, just get them on paper so you can see the truth.  If you don’t know this information, you’ll never master the next category.

Category 2:  The Planned Budget

Start with the 4-walls.  At the top, write your net income for a given month.  Subtract the 4 walls (Food, Housing, Utilities, Clothing, Transportation.)  I know, that’s 5, but you can figure out which ones are related.

Why do we define the 4 walls?  Because these are the basics.  If ALL you had was enough to pay for the 4 walls, you could survive. NOTHING else gets a dime until you take care of the basics.

Once you’ve covered the necessities (please understand the true spirit of that word) then you move to the next most important bills until YOU HAVE NO MONEY LEFT to spend on your budget.

One the 1st day of every month, do this exercise.  Write your income at the top, then subtract your expenses.  If your obligations are such that you have something left over before paying all of your month’s bills, then you didn’t write your budget properly.  You need to revise it so the number at the bottom of the page is ZERO.  This leads us to Category 3.

Category 3:  The Revised Planned Budget

If you have money left over on your budget, assign it to something.  Make a plan for it.  Know where it’s going.  Your budget will not be right the first time you do it, and you should expect to revise it monthly as life changes from month to month.

Need help?  Just ask.  I enjoy helping people solve their money problems.