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What is a Budget

A budget is a “tool” you can use to manage your money. It is especially important if you are facing or have recently been involved in a foreclosure or bankruptcy. It is the only practical way to get a grip on your spending. The budget process requires that you take charge of your cash and understand just where the money is going.  

The budget is a spending plan where you itemize your income and expenses for a time period (usually a month). It will help you prioritize spending and pay bills first and then yourself. If used properly, it will help you reduce your debt and begin a savings program. 

Why do I need a Budget 

If you go to credit counseling for any reason, they will require you to develop a budget. Most Americans spend until the checkbook says zero, then they struggle until next payday. Some even go the next step and spend beyond their income by using expensive payday loans or credit cards. This activity will have dire consequences down the road. A budget, and adherence to it, will break this cycle and once again give you some financial freedom. 

A good stringent budget can also help develop good saving habits. You will be surprised at how much you can put away for your children’s education or your own retirement in just a few years.  

Principals of Budgeting 

The budgeting process can be divided into 3 sections. 

·          Current situation - what is my current income and expense pattern 

·          Where do I want to be in say 1-3 years (timing depends on the severity of the situation). Set Goals 

·          Income and Expense Tracking 

  The Budgeting Guide $3.99

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