Creating a Personal Budget

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By: Phil Rogers

While most of us will utilize plans for vacations, plans for the holidays, or plan out our weekly to-do lists, often times planning how we spend our money is something we never get around to doing. Simply put, a budget is a plan, not necessarily an elaborate plan, for where to put our money. How much to spend, how much to save, what are the items needed, what are the items wanted and differentiating between the two.

To begin to get control of day-to-day spending, begin by journalizing one month’s expenditures. Don’t change your spending habits; just jot them down for one month. Afterward, examine your list. Highlight the necessities and the nonessentials. Now, comes the tougher part, identify nonessential expenses that you would like to decrease. Often, just seeing how much is spent without awareness of the amount of outflow is enough to jump start you on your way to increasing your cash flow by trimming a little to begin with and create new budgets, in increments, to get to your overall goals. Allow yourself to keep some of the little extras you enjoy so that your budget is realistic and not a burden. Also, think in terms of perfecting your budget over the course of several months so that you will not feel the uncomfortable limitations of too drastic a change to your lifestyle. You want the budget to work for you over the long term.


First, let’s identify a few areas to cut expenses and allow you a base line to use during months two and three:

1. After you see what your nonessential expenditures are for one month, break the month down into an average per week expenditure. Take out cash, a bit less than you spent the previous month. Use this allotment for your nonessentials for the upcoming month. If you run out before the week is up, the end is in sight, and you can make it a few days without that extra latte.
2. Look at how many times you eat out each week. Make a plan for the first month for eating out, but with fewer days allowed for eating out. Pick days that you know will be easier for you and stick to it.
3. When shopping, go to the clearance areas first, then the discounted sales areas. Buy what is on sale. Develop the habit of checking the clearance areas on a regular basis. Build your wardrobe this way, piece by piece, not buying a whole outfit at once.
4. Take an afternoon to shop and compare prices of your telephone, cable or satellite company, garbage pickup service, credit card interest rates and terms, etc. to find better rates, including the bonuses often given for switching.
5. Withdraw cash only from your bank’s ATM machines to avoid extra charges.
6. Make a list before going shopping and stick to the list. You may want to comfort yourself in the store by knowing you can always return if you absolutely must to get other items not on the list. Chances are you won’t, more money saved while avoiding the uncomfortable angst of this transition period. You want to succeed, do what works at the moment to avoid impulse spending.

Overall, remember to reduce stress by starting with a snapshot of where you are spending money now, make a budget in increments, allow yourself a few luxuries as you go, don’t be too hard on yourself. You want the budget to work over the long term. Create successes for yourself in the beginning, reevaluate over a period of several months, and a new lifestyle will emerge where you will be more in control of your spending and have less wasteful spending that will generate more cash flow for you as well.

Author Resource:->  Phil Rogers is a recovering Credit addict going on 15 years of living debt free. He now spends his spare time paying forward his knowledge to those who need help with debt reduction, set up a personal budget, or otherwise seeking Debt Reduction Advice

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