| Why Should I Budget? Controlling your financial affairs
requires a budget. For many people, the word "budget" has a negative
connotation. Instead of thinking of a budget as financial handcuffs,
think of it as a means to achieve financial success.
Whether you make thousands of dollars a year or hundreds of
thousands of dollars a year, a budget is the first and most important
step you can take towards putting your money to work for you instead
of being controlled by it and forever falling short of your financial goals.
To those of you who think you know where your money goes without
keeping detailed records, I issue this challenge: keep track of every
cent you spend for one month. I promise you'll be surprised and
perhaps shocked by how much some of your "small" expenditures add up
to.
Budgeting and tracking your expenses gives you a strong sense of
where your money goes and can help you reach your financial goals,
whether they are saving for a down payment on a house, starting a
college fund for your kids, buying a new car, planning for retirement,
paying off the credit cards, or saving for that trip to Aruba.
Since financial matters are one of the leading causes of marital
discord and divorce, getting a handle on your spending, implementing a
budget, and saving for the future can also have positive effects on
your relationship with your spouse or partner.
Should I Use a Software Program?
You don't need to invest in fancy software in order to do a budget,
but a good software program WILL make the job easier, and being able
to print out graphs and reports from your PC can serve as a motivation
for entering all that data.
Many banks are now offering free PC banking and free personal
finance software. You simply dial into the bank's computer (or your
bank may use web-based banking), and download the checks that have
cleared your account, directly into your personal finance software.
Then you indicate an expense category for each check.
You can do a basic comparison of budget versus actual expenses by
category, or you can enter more detailed information such as
investments, assets, liabilities, etc., and print personal financial
statements showing your net income and net worth.
Some of the most popular personal finance software programs for
checkbook and expense tracking are:
Quicken.
Whether you use sophisticated personal finance software or a couple
of pieces of paper and a pencil, the important thing is that you get
on the road to financial freedom by starting a budget today.
The $ Adds Up...
| Habit |
Yearly Cost |
| Daily Cup of Coffee |
$547/yr |
| 1 Pack of Cigarettes/Day |
$1,278 - $1,643/yr |
| 1 Hardback & 3 Paperback Books/Mo. |
$690/yr |
| Lunch Take-out 5 days/wk @ $5-$10/day |
$1,300 - $2,600/yr |
| 3 Drinks at a Bar/Wk. |
$936 - $1,092/yr |
| 3 Six-packs of Beer/Wk. |
$624 - $936/yr |
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