What is Budgeting?

One of the strategies you can use to manage your money is budgeting. But before you jump right in, it might be a good idea to ask 'What is Budgeting?'

A Definition of Budgeting

A definition provided by The American Heritage® Dictionary of the English Language, (Fourth Edition) is:

"A systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period".

But what does that mean?

In this context, the resource we are talking about is usually your personal income and in most cases, it is fixed, at least in the short term.

This means that it the level of income will be relatively stable and is unlikely to increase or decrease significantly in the near future.

That doesn't mean that you can't work on increasing your income, just that if you do nothing to change the status quo (like taking on a second job, or selling assets) your income will not change.

From my perspective, the important phrase in the definition is a systematic plan. A budget is essentially a plan. A plan implies that you are working towards a goal and have developed strategies which will enable you to move away from the status quo!

Budgeting Concepts

Budgeting is a combination of knowing where you are in terms of your personal or business finances right now, and what you need to do to get where you want to be in the future.

Before you can develop a budget you need to get a better understanding of:

• Where your money comes from,
• Where your money goes at the moment,
• What you actually need versus what you think you need, and
• What you want in the future.

Budgeting Skills

'Skills' is a rather strong word, and may put some people off the idea of drawing up and sticking to a budget. You do not need to be an accountant or a math whiz, you just need to develop some new habits.

Living within a budget involves tracking your spending and showing constraint when you need to. If you can use a calculator to add up a few figures, you can manage a budget.

The hard part is working out what your goals are and how you are going to achieve them!

Budgeting Basics

So, think you might want to give it a go but could do with some step by step instructions?

Coming soon...

Budgeting Mistakes

Would you like to avoid some of the more common budgeting mistakes? This is much easier to do, if you know what they are!

Some of these mistakes include forgetting to include all of your bills (quarterly ones are easy to miss!), not tracking your cash purchases, spending windfalls more than once, and making the budget so tight that you feel deprived and then feel the need to rebel by splurging.

Don't laugh - it happens more often than you think!

Budgeting Tools

Are you looking for budgeting tools to help you to develop and manage your budget? You just might find what you are looking for on this page.

Do You Need Some Help?

If you are feeling overwhelmed by the thought of setting up a budget, there is help available!

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