2torial #0564:
Learn2 Establish a Personal Budget (continued)

Set your budget

With your goals and belt-tightening measures in mind, you can set up a realistic monthly budget using a budget book, spreadsheet, or just some plain paper. You can even download budget forms from the Internet (type the words "personal budget" into a search engine), although you'll need a compatible spreadsheet program to open some of these forms once you've saved them onto your hard drive. If you create your own form, you can design it any way you want. Once the form is set, here's how to proceed:

List categories. List your different categories and take into account the amount you've budgeted to spend on each (this may be included on the budget form, or listed on a separate sheet of paper as a reminder, depending on your budget's design).

Keep track. At least once a week, tally what you've spent and fill in your spreadsheet accordingly. If you find you've spent all of your entertainment allotment in the first week, examine whether or not it's realistic. If it is, hold yourself to it. You'll be able to spend money on entertainment next month, anyway--a fact that should keep you from feeling deprived.

Cash flow. At the end of the month, you should have money left over to apply to your goals. If you've met your budget, it will be the amount you expected. If you have more (or less) than that amount, re-examine your budget to see if this is a one-time windfall (or shortfall). If not, adjust your budget accordingly. Budgets take time to settle in. You'll need to readjust categories that are too tight or padded, and you'll need to plan ahead for times when your expenses temporarily mushroom.

With the help of a realistic budget, you can plan for security during emergencies, take the vacation you've always dreamed about, and prepare yourself for a comfortable retirement. A realistic budget is your ticket to financial freedom--and there's nothing limiting about that.

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