How to create a budget - Post #1

I realized that I’ve posted several times and referred to your budget. But some folks may not know the mechanics of starting a budget. So with the new year approaching, I thought I'd post a series on the steps for creating and working with a budget.

Step 1: Determine what time-frame you’re going to use for your budget. The typical time-frame is monthly, but if you get paid on a different frequency and prefer to budget bi-weekly or bi-monthly, that works too. Just choose what works best for you, after all, it is your budget.

Step 2: Determine how much income you make during your budget time-frame. Please see this earlier post about converting your pay frequency to monthly (if you want to budget monthly); and how decide how much income you should budget if you aren’t paid on salaried basis.

Step 3: Figure out how much you’ve actually been spending. This is where your eyes can really be opened to where and how you’re spending your money. If you use software to track your checkbook, you should be able to run reports that will give you this information. If you don’t currently track your spending, you may have to start tracking it for a couple of months before you can really create your budget.

Please check back for the next post that details the next steps in the mechanics of creating a budget.

Can you have ANY fun with your money?!

During these times when everyone is feeling the pinch of the economy, we all hear advice that we have to be very careful with our money and watch every penny that we spend. I agree with that advice, but not to the same extent that I hear in some recommendations.


I agree that it is very important to make a budget and to understand where your money is going. But part of that budget should include some "fun" money. We all need to be able to spend money on things that we enjoy from time to time. You may not have enough money to spend much on fun activities, but you can probably include a little in your budget and set it aside each time you get paid. After you've saved for a little while you'll have enough for that small vacation, the trip to the amusement park, or whatever activity you and your family really enjoy.

I agree that it's important to be fiscally responsible, but you should be able to live life and have fun at the same time.