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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If you’re unhappy with your financial situation, a personal budget could be the key to resolving your problems and getting back on track. Most people cringe at the words “personal budget,” and hardly anyone looks forward to creating and using a budget. However, once you start and use a budget, you’ll be amazed at the change in your financial life.

As you look over your finances, particularly if you’re struggling with debt and having difficulty just stretching your paycheck until the end of the month, you may feel it’s hopeless. But by budgeting carefully, you can, and will, create a positive financial situation out of what looks like chaos.

To start your budget, go through your most recent credit card and bank statements and list the categories you spend money on. These include necessities like rent or mortgage and food. They also include other categories like entertainment and personal purchases like books or music. At this point, simply list each category.

Next, figure out how much you are currently spending on each category. Just get this down on paper so you can look at it honestly. The most important part of creating a budget is knowing your current situation. Taking an honest look at the way things are helps you create what you want.

List all of your categories again, on a new sheet of paper or in a new spreadsheet or document. Now, determine a new amount for that category, based on the money you actually have coming in each month. The bottom line on your budget must be equal to, or less than, your monthly income. From this point on, you’re going to concentrate on living within your means and paying off your debt.

If your budget comes out over your monthly income, you’ll need to make adjustments in non-essential areas to make it fit. Keep in mind that you need to live within your means, but you also need to live. Do not completely zero out categories like entertainment; just reduce those categories. Don’t deprive yourself entirely of pleasant things, because you’ll never stick to a budget like that.

A good budget covers all of your essential spending, pays back debt, and allows you to have a comfortable life. Of course, comfortable in this sense may be relative, compared to what many people have when they live on credit, but you should be able to enjoy your life on a budget.

Once you’ve created a budget, it is essential that you consult it and live within it. This may be difficult at first. Many people find that the easiest way is to put cash in envelopes for each category. When the cash is gone, that category is finished for the month. Others just record their spending in relation to their budget.

Your first month living on a strict budget may be very challenging, and you may have the occasional slip off-budget. When this happens, just return to living within your budget and keep going. After one month, it should be much easier to consult and work with your budget, and you should find the process more natural.

Don’t let setbacks overwhelm you. Set your budget, do your best to live within it, and build your ability to stick to your budget over time. Within months, you will see a great difference in your financial situation.

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