Budgeting is an important aspect of life, especially in todays economy. My goal in this post is to explain the importance of budgeting, how to get started with your budget, and how to use MyFinancialBook (MFB) to aid you with your personal budgeting.

Importance of budgeting

It is proven that simply tracking where your money is being spent will save you money in the long run. This is because you are seeing how much you are actually spending. The next step to saving money is to create a “spending plan”. This is a nice way to say budget.

Spending plans give you an outline of how much you planning on spending during a particular time frame. Most personal budgets plan for a month at a time. Creating a spending plan allows you to determine how much you want to spend during the month, and by tracking how much you are actually spending you are better prepared to stay within the budget you have set. Some big advantages to creating a budget are being able to save for something you want, need, and saving for your retirement.

Getting started with your budget

Setting up a budgeting plan is simple. First, think of the areas that you want to save for. Are you looking to buy a new car? Then make a car fund. Do you want to get out of that apartment? Then make a house fund. If you want to have some money when you retire, then make a long term savings or retirement fund. Do this same thing for your expenses. Brainstorm and write down all the areas that you spend money each month: utilities, rent/mortgage, car, insurance, donations, etc. Categories will vary with everyone.

The next task is to determine how much you want to save for each of your savings categories, and how much you want to spend in your expense categories. Having a set amount will help you limit your spending, and maximize your savings. This planning, and sticking to your plan, is the most critical part of your budget.

Next, you need to start tracking your money. At the end of the month make sure that you are looking back and seeing how well you did. Continue to adjust your plan. As you budget you will find ways to save money in some areas, and maybe that you need a bit more in others. You will be able to incorporate strategies to save more too!

Get started with your personal budget today, and start planning for your future!

We are now almost one month into the New Year!  Most of the goals that were set at the first of the year have almost been forgotten. However, with the economy the way it is now it is hard to forget about our finances.

Here are a few suggestions to think about at the first of this New Year. Don’t spend more then what is coming in, pay off the credit card, and don’t make risky business decisions.

Spending more then is coming in is a very common problem. After all there are always desires and needs even if there is not the cash flow to support them. However, this is how families get in trouble.

Paying off credit cards might be particularly hard, especially if you are in a pattern of spending more then is coming in. Once this debt cycle is entered it is very hard to get out of it. Spending less then is coming in and paying off credit cards will help to get out of the debt cycle. If spending is limited to less then what is coming in there will be extra to pay off the credit cards or other debt.

There is a trap in this cycle. This trap must be avoided. This trap is entering into risky business decisions. When risky business decisions are presented it is very tempting to enter into it because there is a vision of getting out of the deep hole. If a business deal sounds too good to be true it probably is.