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Budgeting for Success
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According to various sources, between 45 and 80 percent of American adults make New Year’s resolutions. And among the top 10 is usually one about controlling spending or getting out of debt.

If you find yourself saying, “I just don’t know where all my money goes” you’ve got lots of company. And if you tend to think budgeting is boring and unnecessary, you’re not alone. But as one individual observed, “Living without a budget is like driving an automobile without a steering wheel.”

Don’t wait to develop a money management program until you are in financial free fall. And don’t let yourself give in to the following excuses: “I just didn’t get the accountancy gene” or “budgeting is a ton of hard work” or “I just don’t have time to budget.” If, like the average worker, you spend approximately 2,000 hours a year on the job, don’t you think it’s worthwhile to spend an additional one or two percent of that time planning where your money is going to go?

The ultimate excuse for not having a budget is having a half-hearted one. This is the budget you have in your mind, but don’t bother to keep track of. This lackadaisical thinking falls under the same category as reasoning that if there are checks in the checkbook there is certainly money in the bank.

A good household budget that reflects every aspect of your financial needs and also plans for emergencies will save you a lot of headaches. Here are a few tips for creating such a budget:

Budgeting Tips

1. Make a conservative income projection. Include only your current salary plus other “known” incomes, such as interest from a savings account or income from rental property. Don’t include “hoped for” tax refunds, raises, or bonuses.

2. Understand your budget categories. There are generally three: fixed (such as mortgage, car payment) variable (utilities, phones) and restricted (groceries, clothes, entertainment, gifts). Since only you set the amounts for the last section it usually requires the most monitoring.

3. Tailor your budget to your particular situation. It doesn’t have to be complicated. However, if you make, for example, $50,000 a year, your budget should reflect that—no more. The average American credit card balance is around $10,000. This is often because over the years monthly expenses exceed income and the debt just keeps piling up.

Having a budget is actually a liberating experience because you know exactly how much you can spend. Then you don’t have to worrying that you’ve overspent. Try it—it works!

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By Brenda Dickerson. Copyright © 2010 by GraceNotes. All rights reserved. Use of this material is subject to usage guidelines.

1. Budgeting Basics by Matthew Pryor, Sound Mind Investing magazine, January 2009.
2. Farmer’s Almanac
3. www.google.com “new year’s resolutions stats” and “credit card debt”

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