Coming To Terms With The 'B' Word
If you are able to read this first paragraph and continue on with the article, you have come a long way in wanting to get your financial situation in order. Sooner or later, the "B" word has to come into play. That's right. It's time to take a look at your budget.

For all of you who are still reading, I commend you. The word budget brings all the joy of having to go on a crash diet. In fact, that is how most people approach budgets. Just as with a diet, you know you are going to be forced to do without the things you really want and be absolutely miserable throughout the entire process. While this is an option you can choose to take if you desire, we will try to present some less antagonizing options to get your budget in order.

First and foremost, let's get clear what a budget is. A budget is merely a plan to spend less money than you make. Nothing more, nothing less. If you are not currently doing this with your money, you have 3 choices:

1) Reduce your current spending so that it is below the income you bring in

2) Figure out a way to earn more money so that you can continue your current spending habits

3) Continue to fall deeper in debt

Since #3 is not an option in this article, we will focus on the first 2 choices. Many "reduce your current spending" budgets are created in such a way that you are already doomed to failure before you even begin. A good example is a budget created by arbitrarily designating the amount of money you want to save each month. For example, someone earning $3,000 a month decides to only spend $2,500 a month thus saving $500 each month. Although this may at first appear to be a sound approach to creating a budget, it will almost surely fail. Most people who budget this way will find at the end of the month they are running short of money. They therefore must stop buying all items, including those which are essential, in order to remain within their designated budget. Since most people aren't willing to forego staples such as food, this budget method usually ends in failure.

An important aspect that most people fail to address when creating a budget is finding out where their money is actually being spent each month. A better approach than arbitrarily designating an amount to be saved is to take the time and actually write down where your money is going. We know that this prospect sends shivers down your spine. Who really wants to know where the money is going? Part of this fear stems from the thinking that if you really know where the money is going, then you can no longer deceive yourself of the way you spend money. Ouch! However, it's got to be done. Whether you like it or not, in order for a budget to work, you are going to have to be willing to take some responsibility. Without taking the responsibility of knowing how you spend money, making a budget that works will be next to impossible and you can stop reading right now.
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