The process of budgeting is a circular process. First you make a budget, then you track spending, then you refine your budget, and it keeps going. This process allows us to refine our spending habits and cut excess expenses and save money. It can be hard to look at our finances this much. People may be uncomfortable learning just how much they spend on coffee or soda, eat out, or how much over what they make that they are spending. These are hard facts to face but with a little work and creativity finances can be brought under control.

Making a budget

A budget is simply the balancing of income and expenses.  The first thing to do is to determine the facts about your income.  At the very least you need to know your take home pay.  If you want you can calculate your gross pay and payroll taxes.  Once you have your net pay it is time to list your expenses.  List out all of your expenses.  Now you have your plan.  I suggest checking your account balances once to three times a week to make sure things stay on track.  Unexpected things can happen in a checking account quickly.

Tracking Your Spending

The next part of the process is to track your spending.  I know of two good ways to do this.  One is to keep all of your receipts, and regularly review them.  The other is to keep a notebook of your spending, and to regularly review the results.  These two methods are not mutually exclusive either.  If you spend a dollar a day on a soda, you may want to eliminate it or reduce the expense.  As you find these areas to save you can redirect resources to other areas.

Refining Your Budget

As you find money you can save cut expenses or life changes you need to update your budget.  Using the right methods you can reach your financial goals.

Budgeting is the first step in taking control of your financial life.  Keeping it up is hard but worth it.  There are many ways your budgeting efforts can be derailed, but if you start again eventually you will be successful.