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Budgeting Is Not As Easy As They Say

By: Steve Johnson

2/8/2008 - 80 Comments

People experience money problems for a variety of reasons. Maybe you lost your job, over used your credit cards, unexpected medical bills, paid too much for your dream home or any number of other reasons.

Most of us avoid budgeting because we are comfortable with the way we live and budgeting will very likely force us into major lifestyle changes, which scares most of us to death.  If you live paycheck to paycheck and have never created a budget before, then you’re probably right.  Going from zero to sixty in under 5 seconds is just as scary as creating a budget.

Budget Tools

The Internet is full of books and worksheets and software to help make budgeting easy. The sales’ pitch is always about how easy budgeting can be with their tools.  But, most of us have a lot of trouble setting up a budget and usually need the help of a financial counselor.  We also have a hard time continuing with a budget after the first few months. The daily drudgery of figuring out how to best spend money just cannot compete with America Idol.  I’m not saying that these tools aren’t any good, just that budgeting is not as easy as advertised. If you struggle to setup a budget, you’re not alone.

Here is an easy tool for creating a budget, Free Budgeting Tool.

Budgeting may be the best long-term method to get your finances in order, but if you have never done it before, then I suggest you start with something simpler.  Budgeting can drastically change the way you think about money.  What you need is a progressive way to move towards budgeting over time. That way, you will not have to change everything quickly and will be able to build on each step you take.

On the other hand, if you’re in high school or college and just starting to deal with money, then this is a perfect time to create a budget.  If you start with a budget while you’re financial matters are small, your budget will grow with you. Before you know it, you will be managing your family’s money very effectively without thinking of budgeting as painful.

Ease Into a Budget

For the rest of us who have never created a budget.  Try to ease yourself into budgeting with a three year planThe first year, just focus on writing down all your expenses.  This will help you answer the question: “How much do you spend?” Here is an article to help with this step: How Much Do You Spend?

In the second year, use your documented expenses from the first year to create an estimated monthly budget which you can use as a guideline to see how close you are following. Continue to track your expenses and begin to look at the big picture.

In the third year, create a yearly budget with estimated income and expenses.  At this point, you will be much more comfortable with your system of managing your money and are in a much better position to start planning how to change your lifestyle by reducing expenses, creating a savings account, tax planning and saving for large future expenses like cars, houses, college, etc.

At this point, you will have a very good handle on your money and will also feel good about it. This three year plan to get you budgeting can drastically decrease your risk of getting frustrated and giving up. It is much easier than trying to suddenly live on a budget.

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