Budgeting for dummies: some basic tips

Just because you are reading an article about budgeting for dummies doesn't mean the process is complicated!  You might just as well be reading an article about budgeting for experts because as long as you follow a few simple rules it really is an easy straightforward process.

There is no need to get hung up about structure and detail, all you have to do is fill in a spreadsheet and you're well on your way to preparing an effective budget.  Of course, there are some basic principles you have to follow but as long as you have the correct outline you will soon be finished.

Having a budget is the first step on the path to financial freedom because once you can manage your money you can stop living from paycheque to paycheque and get on with enjoying life.

So without further ado let's go over the basic points of budgeting for dummies.

Tips for budgeting for dummies

• Budgeting is really the process of detailing how much money you have coming in and how much money you have going out.  As long as you have more coming in than you have going out life will be easy.  If it's the other way round you'll need to make some adjustments.
• In the first place, it is easy to work out how much money you have coming in.  Just add up your monthly salary, and any income from other sources that you might have, for example benefits, tax credits, shares or dividend income from other investments.  For most people though salaries will make up the bulk if not all income.
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  Secondly, you need to work out how much you are spending every month.  This is where things become a little tricky, but all you have to do is set yourself a task of writing down everything you purchase during a 30 day period.  Starting at the beginning of the month, commit yourself to becoming obsessed with everything you spend, and get into the habit of writing it all down.  Keep a pen and pad with you all the time and every time you use your wallet, make a note of it.
• Once you have finished both of these tasks it is easy to transcribe the details into a spreadsheet and your budget is complete.  But it's a good idea to keep updating your budget too, so maintain your habit by keeping accurate records over a long period and soon it will become second nature.
• If you find you are spending more than you earn, it is not the time to panic.  Instead, it's time to get your head out of the sand and take some action on your spending.  By simply questioning your expenditure you'll be surprised to find how easy it is to cut back on unnecessary items to bring yourself back into the black.  You can get really creative here and you will find it surprisingly easy to discover what you can do without, especially when the payoff is extra cash in your pocket!

So when you think about it, budgeting for dummies is not something to be afraid of. It is simple common sense and once you make the leap you will never look back.