5 Good Reasons to Budget
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Tracking expenses and keeping a budget does take some effort. But the control and confidence you'll gain could be worth it.

If you don’t spend all your income each month, you don’t really need a budget.
A budget can help your family:
Having a budget gives you:
Having a budget can help eliminate:
Having a budget can help prevent financial crises.

Right!

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Track Everything Challenge

What’s the first step to maintaining a monthly budget? Tracking expenses. Not just your monthly bills, but small, everyday expenses like coffee, magazines and movie tickets. Don’t judge yourself, simply keep track. Record everything. After a month, plug the numbers into our worksheet, and you’ve got a budget.

GET THE WORKSHEET

Session Q & A

  • Even if your income varies, many items in your budget will stay the same from month to month, like rent, car payments and utility bills. Create your budget around these fixed costs, adjust for variable expenses like groceries and entertainment when you need to, and try to build up your savings to manage months when your income isn’t enough to cover all your expenses.

  • This is why it’s important to have an emergency fund. But if you don’t have one set up yet, start by looking at the variable items in your budget to see how much you can cut back to cover the unexpected expense. If you can’t cover the expense in one month, you can borrow money or, as a last resort, put the expense on a credit card, then allocate a monthly amount into your budget to pay it off as quickly as possible. While we are on the subject, check out the Creative Ways to Build Your Emergency Fund video.

  • A budget is a tool to help you make better financial decisions. So don’t just use it to identify problem areas. Show your family members how tracking expenses regularly can help you feel more confident about how much and when you can spend on things that you all want—like family vacations. The more involved your family members can be, the more they’ll understand that budgets can be a good thing.

  • You can and should budget for irregular expenses, but it takes a little extra work. Make a list of every irregular expense that comes up over the course of a year. Sometimes thinking about the seasons helps. For example, you may pay for snow removal in the winter, or tree-trimming in the summer. Ask your family to help, and look over old credit card statements or check registers to jog your memory. Once you’ve got your list, total it and divide it by 12 to create a monthly figure. Set aside that amount each month, whether you get a bill or not. When the bills do come in, you’ll have the money ready.

  • Your budget is a tool that helps you manage your money more effectively. You’ll be surprised at how often you can use it to help you make more confident decisions. You might look at it daily, or weekly. But as a rule of thumb, you should take a look at least once a month to make sure it’s updated with any changes in income or expenses.

David Ning

David Ning is the founder of MoneyNing, a personal finance site with more than 500,000 unique visitors per month. He also posts regularly for MoneyNing on Twitter and Facebook. His other online properties include Investing School and Personal Finance Buzz—a bookmarking site that features the best in personal finance and money articles. Before becoming an entrepreneur, David had a successful career in information technology and sales. David is the father of two young children, and lives in Irvine, California, with his family.

David Ning is the founder of MoneyNing, a personal finance site with more than 500,000 unique visitors per month. He also posts regularly for MoneyNing on Twitter and Facebook. His other online properties include Investing School and Personal Finance Buzz—a bookmarking site that features the best in personal finance and money articles. Before becoming an entrepreneur, David had a successful career in information technology and sales. David is the father of two young children, and lives in Irvine, California, with his family.

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