It has been a while since the last update, but let's assume you have stayed on task. By now you are tracking your finances and getting better at monitoring your expenses as well as your income. Whether you are using a paper form bank ledger or computer software you should have a system listing your transactions. It won't be perfect, but that only comes with time. There will be times when you forget to list that Saturday night gas purchase. There will be times when you get the math wrong. It is okay. Your monthly statement is the opportunity to fix it. By balancing your account you review your accounting records and begin to see a spending pattern.
This is a great start to gaining financial control, but it is not full control of your money tool. Reviewing your finances is one part, the other is future planning. This is where a budget is used. Unfortunately, the word budget has come to mean something bad. "I can't have that, because I am on a budget." is a common sentiment. It is used to imply restriction. Actually, everyone is on a budget. Some budgets are larger than others. A budget is simply a financial plan. By examining your spending patterns, knowing your income and expenses, you can develop a plan for future expenses. It also is a way of finding where excess in one area can be used to pay for items in another area. Maybe by giving up the vending machine will give you money for parking. Giving up fast food lunch will pay for your cable bill. A budget gives you a picture that is easy to see and sometimes even pretty (that is with a color printer and a couple pie charts).
Continue to work your plan and use your money tool. Next update, I will take you through basic steps to make a budget so that you can begin to have full control of your finances.
As always feel free to leave comments, questions or your point of view.
