Say it with me: “Buuuuddddgggeettt.” Good. Now – do you have one? Before you say yes – know that I’m not talking about a ‘mental’ budget. Thinking that you have around $60.00 to spend is different than knowing that you actually have $38.00. If your answer to the above question is “No” – it may be time to step up and get organized. In times like these (and times are hard), a budget is almost as necessary as your paycheck! With layoffs and pay cuts galore, it may be just the thing you need to get yourself (or keep yourself) on the right track.

Keep in mind that having a budget doesn’t mean you’re old… or boring.. or frugal! A budget means you’re organized. You’ve got it together. You’ve got a plan! (Or at least a rough draft anyways). And really – what’s more empowering than that?!

Budgets are easy to create and it should only take an hour max to build your own. It’s best to create a budget based on your monthly expenditures so that you can obtain a comprehensive view of all of your bills and more closely track your miscellaneous spending on eating out, shopping, etc. You’ll need to gather all your bills and statements from last month and then sit down for the following:

If you have Microsoft Excel (or it’s equivalent) on your computer, it’s easy to start there. Otherwise grab a pen and some paper or check out the following sites for printable worksheets:

http://www.womens-finance.com/monthlybudget.shtml
http://www.betterbudgeting.com/budgetformsfree-basicbudgeting.htm

The 1st item you’ll want to address is always a favorite: Income

Your income will include: your salary, interest (if you have savings), allowance/gifts from parents (if you still have this, I envy you), funds from your e-bay sales, etc. It’s best to track your income on a “net” after tax basis for budget purposes.

The 2nd (and a bit depressing) item you’ll want to address is: Expenses

Expenses encompass pretty much everything: Car payments, rent, shopping, utilities, eating out & happy hours, even toilet paper from Target! An expense is anything that goes out of (debits) your account. This is the area where you’ll need to spend a majority of your time focusing. While it’s okay to take one lump sum expense number and subtract it from your income, it’s best to examine your expenses individually to see where there may be excess or potential for savings. Now I’m not saying to examine each individual purchase of TP, but if you see that in a given two week period, you went to five happy hours and out to lunch six times – there may be potential for cutting back. After all, the purpose of a budget is really to open your eyes to your spending habits and to evaluate if there is room or need for change.

What I like to do is divide my expenses in to two groups:

Absolute Musts: Car payment, rent, utilities, credit cards, student loans, cell phone bill, insurance and anything else that may be appropriate for your situation.

Fun Times (the name should say it all): Happy hours, retail therapy, dinner, movies, lunch, salon outings… and more.

I immediately subtract my “Absolute Must” expenses from my income, leaving me with a “left over” balance. This balance is what I have to use towards Savings (3rd item) AND “Fun Times” expenses.

I find it’s best to take out what I want to save before plunging in to all my excess drinking and shopping. Even if it’s an amount as small as $20 – saving something will make you feel accomplished. Open a separate savings account if you don’t already have one. It’s best to keep your savings separate from your checking account / spending money and having an account with a small balance will motivate you to put something in there!

If it’s possible to live off of only your “Fun Times” money for the month instead of using your credit cards – do it! This way any amount you put towards your cards will go to paying down the balance and you won’t be piling more debt on top of it. The goal is after all, to get yourself out of debt and start a savings for that fabulous future of yours!

If you find that in a given month, you’re spending more than you’re taking in – don’t stress! This just means it’s time to examine where you went wrong. If your excess spending is a result of your “Fun Times” spending – chances are a slight adjustment can be made in your social calendar and you’ll be right back on track. If you find yourself spending a lot on the “Absolute Musts,” look in to cutting back on utilities. Are your cable, internet and phone all bundled into one package? Most providers offer big monthly savings if you have all three services with them. Find that your electricity is through the roof? Make a conscious effort to turn off lights and appliances when you leave. Also, consider consolidating your loans or credit card balances into one monthly payment.

A budget isn’t meant to be a list of strict rules to abide by, but rather should be seen as a set of guidelines. If you have trouble sticking to it, don’t worry! A lot of people have to adjust and make a conscious effort. Struggling along the way is a given. In the long run, sticking to your budget will have big rewards. Not only will you be less stressed, more organized and empowered, but think of how great it will feel knowing that you and you alone have gotten your finances under control and have built up a pretty decent size savings account too!