Budgets

Because they don’t teach you personal finance in school but you are expected to be at the very least competent at it, we’ll start with budgets. There are several different methods of creating a budget. They all come down to as listing of revenues (job income, passive) and expenses (rent, groceries, etc.)
Everything after that is gravy. It’s just to make filling it out or sticking with it easier. Some computer programs turn your numbers into colorful graphs or up sell other products — which kind of defeats the purpose of tracking your money so there is enough leftover to save.
You don’t need to pay for a program or a service. Budgeting is just a matter of estimating your expenses and making sure that you have enough revenues to cover them — keeping yourself in the black. As long as you don’t allow your budgeting to leave you feeling like every penny has to be accounted for, you won’t feel the need to splurge beyond the limits of your budget (staying in the black).
I think the reason most people stop budgeting is that they plan their budget to be too restrictive. After working hard all day, its terribly depressing not to be able to be free to spend some of the money you spent all day working for. Build some wiggle room into your budget so that you can splurge a bit. But if you always go over or splurge every night, your budget will not survive in the black either.
If you have lost your job and have no money coming in, then you have nothing to budget. In general, don’t let yourself spend more than you have. I realize that replacing a salary can be almost impossible in this economy. If you must live off your credit cards for a for a few months (2-3), you can plan to pay it back. But you don’t want to spend forever without refilling some of it. Even if you have to get a short term or seasonal job do so just so the deficit is not complete. Once you get on your feet again you can create a plan to pay back the debt you were forced to incur and get back in the black again.
For example, now I will share with you by terribly sophisticated system.
I am on salary and get paid twice a month. I put the amount of my check at the top and the middle of a blank sheet. Then I write in my expenses underneath my revenue at the top to come out at the first of the month and again under the mid-month’s revenue. I include a line item for savings just like it was a bill. I figure 10-30% of my gross (after taxes) income for savings depending upon how much I am able to bring in.
Finally, I work in 1-2 hundred dollars for groceries and sundries. This allows me the to keep myself to a budget and yet gives me the flexibility to splurge on extras for the pantry, get my hair done or try something from Ebay.
Some people find it easier to stick to a plan if they have the bank automatically reserve a certain amount of your paycheck each month for savings or other items. I personally have no problem allocating for savings and prefer to do this myself as it gives me greater flexility.
Any plan that places limits on spending can be considered budgeting. From keeping in mind the importance of savings and therefore keeping spending under control and having money leftover to save. To accounting for every penny with all kinds of worksheets and graphs.
The trick is to find a system that works for you. Most of the time that system only works when it places some restrictions on spending without making you feel so squeezed that every penny is accounted for.
I spoke before about doing research into multiple streams of income. I have decided that this is more strictly defined as passive income from several diverse sources. It is difficult to separate the scams from what actually works and makes a decent living. I learn best by doing, which is why I plan to stick with this blog. I intend to learn SEO and other marketing strategies available on the Internet and see if I can make it profitable over time. Every so often, I will let you know how it’s going – stick with me!