Time Frame

• A budget is simply a plan of your income and expenses over time. You can plan for a weekly, monthly, annual, or any period budget you desire. When you first begin budgeting, it may be helpful to keep a daily journal of your spending. You can then use your journal to build your weekly budget -- based on your actual spending activities. As you become adept, you can extend your budget over longer periods of time, and take steps to secure your financial future.
  
  

How to Budget

• When you prepare a budget, you get a clear picture of your financial situation. This allows you to monitor expenses and even predict future trends. You create a budget by listing all your income and expenses. Include fixed expenses such as rent, mortgage payments and insurance premiums. Do not forget to include variable expenses such as clothing and entertainment. When you are done with this process, you will have an overview of your spending pattern, which you can then prioritize and adjust to make ends meet. As you prioritize, remember to distinguish between "wants" and "needs."
  
  

Budgeting Tools

• Technology has made budgeting easy. Electronic spreadsheets such as MS Excel offer personal budget templates that calculate category totals. Using spreadsheets, you can adjust your budget as needed, effortlessly. Through home-budgeting software tools such as Microsoft Money and Quicken, you can create checkbooks, monitor investments and formulate debt-management plans. Some budgeting software tools even facilitate automatic bill payments. Free, online personal finance tools are available that provide transaction alerts and allow you to access your accounts from a single source.
  
  

Considerations

• Simplicity and realism are the keys to a successful budget. If you can afford that monthly outing, allocate for it. If you cannot, remove it from your budget. Your budget should contain a certain amount of flexibility, to allow for unexpected expenses such as car repairs or inflation. Reviewing your budget is as valuable as creating it. A budget summary is essential for an overall picture. Comparing budgeted expenses to actual expenses will show you how you're doing with your financial goals. You will then be able to adjust, and work in appropriate changes.
  
  

Warning

• Budgeting has become a necessity in today's world. The line between luxuries and necessities is becoming blurred, and you may not realize how indebted you are until collectors start calling. According to government statistics, many households earning less than $50,000 per year have spending patterns that exceed their incomes. Spending beyond your income can lead to bankruptcy. Budgeting helps you pace yourself, keeps you aware of the spending creep, keeps you realistic and out of financial trouble.