Jeff Nelson asked:

You just graduated college, started a new career, got married, had a child, bought a house, bought a boat, whatever the case may be budgets are used at every stage of life. Budgets are used as a planning tool to set financial goals. Budgets are used to plan for the future to be allocating the proper resources today. Setting up a budget is very uneasy and uncomplicated, there are even online tools that will do it all for you. The harder part of the equation is determining what percentage of your income goes where. There are general guidelines about personal budgets out there, but a budget can provide you with a much better comparative advantage if it is tailored directly to your finances. Personal budgets serve people to plan and see how much money they want and can spend on each sector of their life. It is up to the individual how much money they want to put where so budgets differ greatly. Some budgets can provide people with a mechanism to save up for something that they desperately want, and once they have achieved that goal their budgeting is done with. Others use budgets as a daily tool to regulate how much money they spend on each sector of their life so that their finances can be balanced with the adequate funding.

Whether people admit it or not, budgets are complied in the mind of the individual even if they do not put it on paper. Most people have an idea in their mind how much they want to spend on what but when unexpected occurrences arise they get confused and often make bad financial decision. This shows the importance of putting budgets down on paper or on the computer so you can see the ratios of where your money is being spent. Budgets also act as an indicator to see where you are over spending and overspending. You might have not been aware of it before but your entertainment budget is greater than your food budget, may you have a problem with this and maybe you do not, it is up to you. But budgets allow you to see this information and you can assess any way you want.

Personal budgets can give a person more freedom because they do not have to worry about any unexpected expenses from affecting their daily life. When setting up a budget it can be beneficial to over account for such items as food or utilities so that there are no surprises when the bills come around. Personal budgets not only act as a planning device but they also act as a regulating device. If you go over budget in one sector that means that you have to directly reduce funding in another. This means that you will never go over budget because you are manipulating your budget so that you do not. Your budgets can be flexible must you must be aware that providing to much variance can cause you to loose track of the general concept of budgets.

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Patrick Omari asked:

For every person that has bought a flight on the internet and wondered why it is so cheap - this article will explore and hopefully dispel the myths that surround budget airlines. Like everything in life and as the old saying goes, you get what you pay for. But is it worth saving that extra cash for your trip or splashing out on this small part of your holiday.?

So, you buy the ticket at a great rate, albeit with some hidden taxes, charges and fee and prepare for a great holiday. As the day of departure approaches, you eagerly anticipate the holiday or trip itself, but you are probably a little apprehensive about the flight. For those who haven't used budget airlines before, it is hard to know what to expect from the flight.

Travelling by aeroplane can be awkward, irritating and tiresome so you expect a budget airline could be worse. All the worst things about flying will be emphasised by the 'budget' part of the flight company. Will you regret this decision that seemed such a good one when you made the booking?

Leading up to the flight, you may get e-mails regarding information that you need to provide to assist a smooth check-in. You can opt for an online check-in, allowing you priority boarding on to the plane. This is a great idea as some flights will not have seat numbers, forcing groups to be separated as the plane fills up.

Providing the information via e-mail enables a quick check-in at the airport with queues reduced to a few people at a time. The whole process is reasonably easy and makes your experience even better as you seem to be able to take more advantage of the duty-free and airport shopping.

Boarding the plane is as difficult as normal airlines, if not more difficult due to the lack of numbered tickets. As you make your way up the stairs, the delays are noticeable as people hunt for enough seats together to keep their families and friends close by. This is mildly irritating, especially in the cold and wind, but also can be a common problem on the more expensive airlines.

Finding a seat is a race and for people travelling in groups is a dog-eat-dog situation. Regular budget fliers are clearly aware of how to take advantage and will punish hesitation in the newer budget travellers. Go in focussed and make sure you grab that seat before someone else does. You will regret it if you delay for only a few seconds as a budget airline is a dangerous place for consideration and politeness.

Once seated, those travellers over a metre tall will notice the considerably small amount of leg-room allocated. As a flier that struggles with my knees on any aeroplane, I was quick to realise that leg-room is at a premium on budget flights. Again, early boarding can rectify this problem before it starts, be quick to grab the emergency exit seats as there is ample room for six footers and up.

As the flight commences, don't expect a meal. Free food is one of the sacrifices that budget airlines will force upon you. Not the biggest loss, especially as it usually adds a substantial amount to the overall cost of the flight. If you get hungry while flying, take some cash and take advantage of the various snacks available. They may cost a small fortune but what do you expect when you are flying a thousand miles for five pounds.

Don't expect a peaceful journey. You may feel bombarded with sales pitches and various products will be presented for your perusal. Again, they are looking to boost profits and who can blame them when they get me so far for so little money? If you manage to resist the hot croissant, glass of wine or scratch-cards (for charity, of course) then the flight will still be cheap.

When you land in your chosen destination you may face the next problem with budget flights. It would appear that a lot of the cost of flying could be in the location that you land. The flight may tell you that you are landing in Barcelona or Rome, but you could be a hundred miles from the city. Again, this can be sorted out pretty easily with a train or bus ride - not pushing the cost of travel to anywhere near that of a non-budget airline.

Overall, the cost of flying with a budget airline is certainly the key benefit. Regular fliers with premium airlines will find the flights a little uncomfortable and not as pleasurable but the price certainly makes up for any inconvenience.

As long as you know what to expect, budget airlines tick all the right boxes and sacrifice the luxuries that you won't miss at all. The flights are cheap and still get you there so what's so bad about no in-flight meal and restricted leg-room? Budget airlines may be cheap but that's not a bad thing when they offer such a competitive service to those of us that can't afford to fly in a winged five-star hotel.

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Fred Waters asked:

So you want to get back into shape and lose those unwanted pounds.  The problem is you have a limited budget, so a commercial grade model is out of the question.  In fact, your limited to models under $1,000. 

This puts you in the budget treadmill category. Although they may not be a sturdy as high-end treadmills, there are some budget models that can help you acheive your fitness goals without requiring a second mortgage.

There are several considerations before purchasing a budget treadmill. 

Budget treadmills have some limitations.  They are not designed to train for marathons, and they are not built to withstand hours of usage per day.  Budget treadmills are best designed for walkers, although certain models in the  $800+ range can handle joggers.

Budget treadmill are not as durable as more expensive models. They are built with budget parts. Your chances of needing service increase in comparison to higher priced machines.

Budget treadmills come with budget warranties.  Some have coverage for only 90 days.  I recommend you get an extended warranty that covers you for at least two years.  If the machine breaks it is not your problem. 

Usually the specified user weight limited is too high. It is absurd to suggest a treadmill for under $1,000 can handle a 300+ lbs user.  

Here are some recommendations regarding the features of a budget treadmill. 

Motor - You need a motor that is sufficient enough to work without straining at higher speeds or steeper inclines.  I recommend at least a 2.5 continuous duty HP motor. 

Treadbelt Length - You want a length that is adequate for your height.  For an average individual a 54" treadbelt is sufficient.  If you are over 6'3" you may need to upgrade to a model that has a 60" treadbelt.

Stability - Budget treadmills are often lightweight treadmills.  You want a model that is stable when walking or jogging.  Some models under $600 may bounce around when you use them. The heavier you are the heavier you need your treadmill.

User Programs - Some people prefer manually adjusting their treadmill.  However, a selection of challenging programs can be very motivating.   You want to get a treadmill that has at least 6 workout programs.  User defined functions can also be a plus. 

Brand Recognition - There are countless brands of treadmills, some are decent while others are junk.  Check out both expert and customer reviews.  Learn which brands have the best track record.  Equally important, find manufacturers that have a good customer service reputation.  Go to the Treadmill Buyer's Guide to learn more about treadmill features.)  

Here are some recommendations.  Icon Fitness, which builds ProForm and NordicTrack treadmills, dominate the budget market.  They tend to offer some of the best value and pack their models with impressive features, considering what you pay for them. Focus on their models that are on sale.

On the high-end of the budget category, both Smooth and Sole have an entry model that starts at $1,000.  Both offer a lifetime warranty on the motor and 3-year parts coverage. 

In general I would caution on buying a treadmill below $600.  Considering the abuse a treadmill takes in order to function, you want to avoid a cheap treadmill with cheap parts.  And you are not going to get into shape or lose weight when your treadmill is an oversize clothes hanger that doesn't work. 

When buying a budget treadmill do your research and use some common sense and you will end up with a machine that will help you achieve your fitness goals. 

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Lori Smith asked:

Most contractors I run across confess “I never have as much money at the end of the year as I expect to.” Do you suffer the same fate?

Do you arrive at year end wondering where your money went to? If so, I’d bet you’d like to learn how to avoid that ugly outcome.

Pay attention here, I’m going to let you in on a little secret that will help you end those unpleasant year-end surprises. Lean in close. Don’t tell anyone about this. It’s so secretive that few contractors do it. Are you ready?

Use a budget

That’s it. That’s all it takes. Create a budget, track the variances, and take corrective action when necessary. Class dismissed.

Oh, you want to hear more? Okay. Keep reading to learn how to put a stop to those nasty year-end surprises.

Annual budgets allow you to stay on top of your financial progress as your year unfolds. They arm you with the ability to reel in expenses before they kill your bottom line. They force you to think through your business’ strategy and its resource allocations.

When you don’t have a budget to monitor, or don’t monitor the one you have, you are destined to arrive at year-end thinking “Rats. Where’d my money go?”

Contractors’ aversion to budgeting has always struck me as funny (not in the ha-ha sense). On the one hand, contractors tend to be obsessive about planning field work. They know that letting their field crews sort out what to do from day to day is a recipe for disaster. But on the other hand, they don’t apply that reasoning to their business. Lack of business planning leads to poor financial performance; it’s as simple as that.

You need a budget, it needs to reflect the reality of your market, you need to keep a close eye on its progress, and you need to take corrective action when it’s called for. Anything short of this will leave you with that “What happened?” feeling.

Look at the Market

Before diving into the how-to budget details, let’s make sure you understand the connections between your budget, your business plan, and your market.

Your budget is a financial representation of your business plan. Your business plan’s purpose is to take advantage of profitable opportunities in the market. Budgeting should not be attempted until your business plan has been developed.

Your business plan should be aligned to the size of your market, the prices your market will pay, and the cost of serving its needs. You can only make as much money as your market will support and your business plan will deliver. Budget accordingly.

Contractors often put the cart before the horse. They set sales, overhead, and net income goals, put them into a budget, and then try to craft a strategy to fulfill them. That sequence totally ignores the market.

It’s foolhardy to create the financial model and then try to craft a business plan that fits it when the business plan hasn’t been tuned to the market. First strategy; then budget; then meet the budget; then build a bulging bank account.

Your budget will be developed through five stages: preparation, rough draft, refinement, reality check, and rollout.

Stage 1 – Preparation

Unless you implement a new sales and marketing plan, you improve labor productivity, or you reduce overhead, your financial performance will be controlled by the market and the economy. If they grow, you will make more money. If they shrink, you will make less, or even lose, money.

In this industry, past performance is the best predictor of future performance - unless you force change. Build your budget on the foundation of your recent three year financial performance. To do that, gather together the balance sheets, income statements, and cash flow statements for those years.

Next, tap as many information sources as possible to gain an informed view of upcoming market changes. Visit with your banker. Visit with your insurance and bond agent. Buy construction forecast data from McGraw-Hill or a similar provider. Search the census bureaus’ website for reports on economic projections. Call the Federal Reserve and see what reports they have available. Call your local economic development councils.

Eventually, you will discover the experts’ consensus opinion. Even they can be completely blindsided by turns in the economy, but they are the most informed group to listen to.

Go over the information with your executive team. Reach consensus on your upcoming market opportunities.

Here are the Stage 1 steps.

Grab the last three sets of annual statements.

Gather up construction forecasts.

Discuss market opportunities.

Stage 2 – Rough draft

The purpose of the rough draft is to give you a reasonable starting point. Your rough draft will not consider changes to your business plan nor changes in the economy. To create the rough draft, study the income statements from the last three years and determine:

Your sales trends

Your direct cost trends

Your administrative overhead trends

Your sales and marketing expense trends

Your operations support trends

Your labor burden trends

Your average gross margin

Take your most recent income statement and adjust each line item for the trend (up or down) or jot down the three year average, whichever you feel is most appropriate.

Here are the Stage 2 steps.

Determine trends and averages for each income statement line item.

Decide whether the average or the trend is the most appropriate assumption.v

Mark-up last year’s income statement accordingly.

Stage 3 – Refinement

Now, adjust the numbers for changes in the market and changes in your business plan.

If you expect the market to shrink, assume both your sales volume and your margins will shrink. If you expect your market to grow, assume either your sales volume or your margin will grow. Do not assume both will grow (we’re not going to go into this but it usually holds true).

Now estimate the cost impact of new business strategies. For example, you may decide to expand sales by pursuing the office building market. In order to land the work, you will authorize a $10,000.00 advertising campaign consisting of magazine advertisements, direct mail, and client entertainment. This spending would be on top of the advertising you do to generate your current work load. Your advertising budget needs to reflect the additional $10,000 investment.

When thinking through your business plan, look at closely the cost impacts of:

Increased advertising to pursue new market

Expansion of sales staff

Purchase of new equipment

Adding office staff

Implementing or altering management information system

Employee training and development

Changing the bonus plan

Entering a new geographic territory complete with local office

Pay raises

Rising health care premiums

Another budget impact you need to account for is improved selling performance. Assume your sales team persuaded another 20% of your clients to hand you negotiated contracts. You budget would need to reflect the higher mark-ups associated with negotiated contracts.

You are ready to finalize your first draft. Adjust the trended or average numbers for each line item by the impacts of your business plan. Re-type the document so that it is easy to ready.

Here are the Stage 3 steps.

Verify your labor pool and operations support staff team can handle the projected work load.

Verify the targets for sales volume and direct cost markup are reasonable

Verify increases in marketing and sales expenses.

Update equipment expense and depreciation to accommodate new equipment needs.

Update sales volume goal.

Update direct cost margin goal.

Calculate expected work load (labor, material, equipment costs).

Revise and re-type your budget.

Stage 4 – Reality Check

One of the primary reasons contractors fail to hit their profit goals is because they are overly optimistic about their gross margins. The time has arrived for everyone to join a no-holds-barred discussion on operations and sales.

You need to challenge all assumptions made that the crews will perform better than they have in the past. No baseless, pie-in-the-sky claims are allowed. Unless, there is a reason to believe turnover has been greatly reduced, more efficient equipment has been purchased, or the operations management team will be able reduce downtime and rework, do not assume your labor will be more productive than in the past.

The other claim that you must question strongly is the ability of the sales and marketing team to generate better quality leads and better paying jobs. Sales and marketing personnel are highly optimistic individuals by nature. Take their promises of greater glory with a grain of salt. Believe it when you see it, not before.

In other words, don’t take their word on gross margins at face value. You need to analyze it segment by segment. Discuss the real mark-ups each segments produces. Pull out your job costing reports to see what the real mark-ups ended up being.

Ask them why they believe the leads will be better and why the margins will improve. Segment by segment, forecast total sales and margins. Pull them together and compare to your budgeted direct cost and gross profit.

Adjust your budget accordingly. Now, you’ve finalized your budget. Time to roll it out.

Here are your Stage 4 steps.

Call a meeting with your top operations and sales personnel.

Review and discuss field performance and projections for improvement.

Review and discuss advertising and selling segment by segment.

Tweak the budget based on the outcomes of these conversations.

Now, you’ve finalized your budget. Time to roll it out.

Stage 5 –Roll-out

Now that you’ve finalized the 12 month budget, you need to break it into manageable chunks (12 chunks that is). Create a spreadsheet with 14 columns. Label them by month. Each row is an income statement expense. The first column is the name of the expense. the second column is the total for the year. The third column is for January, the fourth for February, and so on.

Look at each income statement line item and determine whether it is an expense that stays consistent each month (e.g. office rent) or varies monthly. Many overhead expenses are billed twice a year or quarterly. Put the appropriate value under each month. The total for the months must equal the total for the year.

Pull up monthly sales for the last three years. Calculate the weighting of the sales per month. For example, if you typically sell $400,000 in July out of $3,200,000 annually, July accounts for 12.5% of your sales. Calculate 12.5% of your budgeted sales and direct expenses and put them in July’s column.

Continue filling out your spreadsheet until you have the entire budget accounted.

Make copies of the detailed monthly budget and distribute to all individuals who have spending authority. Pull them into a meeting, shut off the cell phones, and explain the detailed budget to them. They need to understand the expenditures planned by the budget, the logic behind the expenditures, the assumed gross margins, and the planned timing of the expenditures.

A word is in order here regarding cash accounting versus accrual accounting. If you are running your business on the cash accounting basis, you should set up your budget and track your progress on the accrual method. Cash accounting is great for taxes but terribly misleading for managing a business.

Here are the Stage 5 Steps

Allocate the annual expenses to the appropriate months.

Determine the historic pattern of your monthly sales.

Create monthly budgets for sales, field costs, overhead, and profit.

Present the detailed budget to your management team.

By completing the 22 step budgeting procedure, you now have in hand the tool that empowers you to manage your year end performance. Of course, the key word in there is “manage.”

Tracking

The second reason contractors fail to hit their year end financial targets is because they fail to track their progress against budget and take corrective action as necessary. Have your accounting staff generate an income statement and cash flow statement at the end of each month.

A word is also in order regarding your accounting staff. Whether inside or outsourced, your accounting staff must get you these reports no later than the seventh of the month. Hold them accountable to that date. They will probably whine like mad but ignore it. Timely reporting must be a non-negotiable duty of their position or service.

The monthly income statement should show:

Budget value for the month

Actual value for the month

Budget value year-to-date

Actual value year-to-date

Actual vs. budget variance for month

Actual vs. budget variance year-to-date

Projected year end based on current trend.

Gather together your management team, review and discuss the income and cash statements.

Taking Action

Budgets do not produce the results. Managing to them is what produces the results.

As variances become apparent, investigate their cause and take all necessary action. That may mean visiting with someone or some group who is underperforming and discussing things can be done to meet the performance goals. Taking action may mean revising the budget in accordance with changes in the economy and market.

When spending exceeds plan, or sales fall short, discuss the situation with your management team and decide how to get back on plan, and whether the spending needs to be scaled back to offset poor sales or increased to take advantage of unexpected opportunities.

You should not ignore unforeseen opportunities just because money wasn’t set aside for them. Adjust the budget as better-than-expected opportunities arise. Reallocate your resources or increase your budget to accommodate the needed investment.

Cash Budget

Translating your monthly income budget into a monthly cash budget is surprisingly easy and highly beneficial. Copy your income statement spreadsheet and translate the monthly sales figures into monthly cash receipts.

The way to do this is to look at your aged receivables. If you typically receive your money 45 days after the job, then your inbound cash trails your sales by one and a half months.

Your outbound cash is also pretty easy to figure. You field labor gets paid weekly. Your office staff twice monthly or so. Your materials are due in 30 days. The overhead expenses are already scheduled. Lease payments are due every 30 days.

Monitor your cash flow budget just like you do your income budget. Go over them at the same time. Usually, when cash flow is becoming a problem it is due to slow paying clients. You need to know that as quickly as possible so that you can chase the money owed to you.

Final Reminder

To run a construction company successfully, you must pay attention to the rate at which your business generates gross profit and the rate at which it spends money on overhead. The only way you can know whether those rates are acceptable as your year unfolds is to create a budget and keep an eye on its progress. Otherwise, you might as well keep expecting those ugly year-end surprises.

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Lisa Nichols asked:

Get tips to save money and develop a personal budget that really works for you. Money saving tips include recognizing when and how household budgets are likely to fail, tips to keep budgets on track and ways to save more money and organize monthly bills.

Money Saving Tips: Creating a Personal Budget

There are some money saving tips you can use to make your personal budget really work. Household budgets often fail because the family trying to track expenses and plan for the future simply gives up. It’s important to recognize from the beginning that maintaining a personal budget is stressful, difficult and not a perfect process. Keeping realistic goals with regular expenditures in mind can also help you save money. Understand it will take time to get used to a new household budget and don’t let mistakes or occasional bloopers deter you from your goals.

More Money Saving Tips that Make a Household Budget Work

In addition to making room in your life for a personal budget, money-saving tips include thinking about short-term goals in addition to long-term goals. It’s important to include buying a new (or used) car in your budget over the next five years. Including exact costs for vacations, weddings, birthdays and other recreational expenses can be hard to do, so focus on estimating expenses to stay on track with your long-term goals.

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Ease household budget problems with a balance transfer credit card. These cards are designed to reduce high interest debt. Use a balance transfer credit card or a low interest credit card to improve household budget results. High interest debt can be a killer over time. You’ll save money in the short term with reduced monthly bills. Transferring balances to a low interest credit card can also help track monthly household budget expenses, since there are fewer bills to pay.

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Martin Lukac asked:

Budgeting isn't that big a deal. Too many people look at budgeting as this large sign saying "I have money trouble."

But it is far from that. Budgeting is responsible financial management. Every successful business budgets. Even the government budgets. It is necessary if you want to meet your financial goals. You may be thinking that no one you know budgets right now, but eventually they will need to. After all, you don't want to be working well into your retirement years just because all of your friends are.

Budgeting keeps you ahead of your bills. It helps you pay off your debt and save for the things that really matter to you. Stop thinking of it as a way to limit your spending or hold you back. It isn't a financial diet. It is a financial road map.

Think of it as three main parts: summarizing how you spend, controlling what you spend and planning for your future.

When you first start budgeting, the first step is to track your spending for a short amount of time to see where it is going. Set up income and expense categories to fit your spending. Using someone else's categories or budget template almost never works. We all have different expenses. It helps to keep all of your receipts for two months. Use these to create your categories and see where you are spending your money.

Make your categories detailed enough to tell you where things are going, but don't go too far and get too detailed. This will just slow you down and make you want to give up.

Once you know what you are spending and where, you can establish some spending goals for yourself. There are some places you can skim back and there are some that you can't. You have to be realistic. Don't set a goal of cutting back your grocery bill by $200 in the first month. Take smaller steps and set smaller challenges. Look for ways to reduce your spending and make it a challenge.

As you work on cutting your costs and reducing your spending, you can start working towards the financial future part of your budget. I like to include with my budget all the planning I do financially. Your debt reduction, your yearly expenses savings, your insurance needs -- this is all tied to your budget. Plan out what you need to do to get out of debt. Without your budget, you wouldn't be able to find the money to pay off your debt faster. Include in your budget categories for debt reduction, emergency savings and yearly payments. You will probably find that you have to choose one goal at a time to work towards. Pay off your debt first, then start your savings.

And keep in mind that a budget isn't something you write down and then try to stick with no matter what. Budgets move. They are adjustable. Just as your finances change, so will your budget. You may find that you have less income one month and need to readjust how much you can spend on groceries and entertainment for the month. Or you could have an unexpected bill come in. Don't just toss away your budget when this happens, use it to take care of the situation.

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Cathy Wilson asked:

Do you have a household budget? Do you balance your checkbook to make sure your expenditures are less or equal to the money you have in your account? Consider the same for your body.

You have a certain number of calories to consume throughout your day. Are you overextended or saving with your calories? If you're eating too many calories, you're gaining weight and out of balance with your caloric budget. Many of us don't consider the cost of the extra calories on our bodies until our clothes start feeling tight. However, if you're eating appropriately within your calorie budget and exercising, you are in balance in the form of maintaining your weight. If you eat less calories and/or exercise to expend more calories, what happens? You will lose weight. The equation of calories in/calories out is the way to lose weight and maintain your weight long-term.

There are 3,500 calories in a pound. To lose a pound, you need to consume less calories than your body needs as you conduct your daily routine. Like any good budget, your goal is not to spend more than you can afford. For example, you see a treat that looks good, check out the nutritional breakdown. As yourself if it is worth the calorie expenditure from your budget if you eat it? If not, don't allow it to break your calorie bank account and pass on to a better food choice.

Do you want to increase your calorie burn? You need to exercise. If you add exercise to the equation, you'll lose weight quicker and more efficient than if you were sedentary. In addition, calories burned through exercise increases your metabolism and the benefits continue even after you stop the exercise activity.

The more muscle you have, the higher your metabolism and the more calories you naturally burn. Aerobic exercise is important. Strength training to increase your overall muscle nass is equally important. Resistance training and weight lifting also add a boost to your metabolism and calorie burn.

If you keep a food and exercise journal, consider it as your health checkbook. Your calorie and exercise budget build your health account better and stronger. Your financial picture can be successful if you monitor your finances closely. Your health will benefit from a successful calorie and exercise budget. Monitor your budget to enjoy maximum weight loss and weight maintenance.

By working with a coach, you can create a comprehensive calorie and exercise budget that is customized just for you, your likes and dislikes.

Just as you are diligent in your personal and family finances, consider the same for your body's calorie and exercise budget as well. By creating a calorie and exercise budget similar to your financial budget, it will help you think about how much you eat and exercise. A calorie and exercise budget will not only help you to eat less, but will also help you make healthier food choices to promote a balanced budget. The bonus of a good calorie and exercise budget is a balanced, successful, healthy and happy life.

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Budget Bitch asked:

I was talking to a lady the other day… in her mid-forties, who told me that they “don’t need a budget”. Naturally, my curiosity was aroused… not 5 minutes before that statement she was complaining that she had to work, and she hated it. “So why don’t you need a budget?” I asked. Her reply was simple… they “don’t have a credit card and they don’t owe any money”.

My question about how much money they have saved in a bank account was met with a blank stare and an answer of ‘Nil savings’. Their future? - Well, they have nothing apart from the employer funded superannuation which now amounts to about $35,000.

 How are they planning to spend their retirement? What activities would they like to enjoy? Have they even thought about this? You see, at the moment the old age pension is a little more than $250 per week. Now I don’t know about you… but that will barely cover my household expenses.

So while this lady has worked hard to make sure she has all her debts paid out, she hasn’t given much thought to what lies ahead in the future. She readily admitted that they’ve frittered a lot of money away each week, since they paid off the mortgage. But then she also realized that if the fridge packs it in tomorrow, they don’t even have the price of a new one in their bank account. That would mean going back into debt again.

Even if they just saved half of their old mortgage payment each week, they’d be in a much better situation when they retire and that could mean the difference between eating out in a restaurant and eating out on the back lawn. (c)

http:www.budgetbitch.com.au

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Thomas Berten asked:

Rules. No-one likes rules. But we all realize that if we didn't follow traffic rules and stop at a red light, our streets would be chaos. If you want to have a successful personal budget, you have to follow the rules (in this case one simple rule).

Many people believe that there are a lot of rules to follow when making a personal budget. People believe you must work on your budget every day, and keep track of every penny you spend, or else your budget won't work. Most people think budgets are a lot of work.

Most people also believe that budgets are hard. They think you need to be an accountant to be able to create and maintain a personal budget.

Budgets can be a lot of work, but they don't need to be, if you follow the First Rule of Making a Personal Budget: Keep it Simple. Yes, like a lot of things in life, the KISS rule applies to your personal budget.

Don't try to create a complicated series of linked spreadsheets with fancy graphs and tables. Don't try to master the most complicated personal budgeting software. Don't believe that you have to go to school and study bookkeeping and accounting to make your budget work for you. Keep it simple.

Start with a blank piece of paper, or a blank spreadsheet, and make a list of what you spend money on every month. That's right, you are not making a budget; you are making a list - how easy is that?

Most people can't even make a list of what they spend each month, because they have no idea what they spend their money on. No problem. Keep it simple. Get a pencil and a piece of paper, and carry them with you everywhere. Whenever you spend money, write in down. At the end of a normal week, you will have a good idea of where you spend your money.

You could then take your week's worth of notes and make a monthly budget. But, to make your budget even simpler, do a separate budget for every pay check, or make a separate column on your spreadsheet for every paycheck. That means if you get paid every week, have a column for every week.

Then, make a plan for how you will spend every paycheck. It's much simpler to decide how to spend your paycheck this week than it is to try to budget for the next six months.

Read that sentence again: make a plan for how you will spend your money. That's the only reason for making a budget. By keeping track of where your money goes, you can make a plan to spend your money where you want to spend it.

If you keep it simple, your budget will be a success. And remember, if you don't follow this simple rule, your personal finances will be a mess, and you could have to declare personal bankruptcy. So keep it simple, because proper budgeting is the best personal bankruptcy alternative.

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Paul Hata asked:

For some, the idea of a budget is often a blur. It is frustrating to see how hard it is to do a budget and realizing that with one wrong purchase, you can actually ruin the entire thing. And this has been a perennial headache for most homemakers.

It is about time to overhaul the way people look at budgeting. It can actually be a great way to keep track of your family's expenditures and help you evaluate the things that you spend the lion's share of the family's earnings on.

What is a budget? A budget is a tool for handling your finances by controlling the family's expenditures in a way that money is enough for paying up bills, and still ensuring that savings are set aside for future expenses - vacations, or children's education, or even for retirement.

Try these simple steps in preparing a no fret family budget, and see the benefits of intelligent spending.

1.Gather three months of your pay stubs and get your average monthly earnings.

2.Get out three months of your monthly bills. Do this for the fixed expenses like the rent, phone bill, car payments and other loans that come monthly. Add them up and get the average. Do the same for other expenses like groceries, and credit card bills.

3.Evaluate the results of your computations. Looking at your average monthly earnings against your monthly fixed expenses and other monthly expenses, think of some ways to economize. Cut back on some items that are somehow unnecessary.

4.Knowing the facts of your income and expenses, develop a family budget and try to stick to this monthly budget.

5.Now that you have a monthly budget, set up a savings account. Save up by making regular deposits to this account.

6.Keep track of this monthly family budget just to see if it is working for you. Try to fine-tune the "rough edges" of this budget as you go along.

7.If you can get hold of a personal budgeting software or spreadsheet application to keep record of your budget, the better. This will make organizing your expenses very easy.

These are the basic steps in developing and implementing a no fret, easy to stick to monthly family budget. Of course each family has diverse needs and wants.

You have the freedom to develop your own monthly family budget, depending on your family's financial background and needs.

No matter how you do it, just focus on the end result, which is building a savings that leads to a bright and financially stable future for your family.

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