More on The Budget

Now that the ledger has been drawn out, it's time to make the entries. Enter every amount of income and every expense for a month. Ideally you should do this for 3 months to show a trend. Taking the time to do this will give you an accurate picture of your personal finances.

From here you can begin to examine your regular expenses such as utilities, mortgage payment, food, credit card debt, car insurance, home insurance, personal insurance, right down to spending money, clothing and ANYTHING else you spend money on.

The goal is to get our personal finances under control. When the month is over, is there anything left?

After you have done this over one month, you can begin to itemize the areas of concern. You will begin to ask questions about you mortgage rate, your credit card debt, your utility company rates.

The Budget

Probably the most important part of successful managing of our personal finances is The Budget. The budget will give an accounting of all of the money we bring in from salaries and wages, investment income, rental income... well you get the picture. Then it will give an accounting of the money we spend. Sounds easy doesn't it.

Well, the money that comes into the budget is usually easy to track because it comes from only a few sources. On the other hand the money that goes out is a whole other matter. We pay bills and spend money in so many different places that it is much more difficult to keep track of.

Get into the habit of asking for a receipt for EVERYTHING. Find a system to record all of your transactions on both sides of the ledger be it a manual ledger or electronic book keeping. Then enter each item every day.

OVERVIEW

Let us begin this journey with some understanding of what we are referring to when we address our personal finance. We are talking about money management, which includes paying our bills, understanding our mortgage rates, knowing what the current mortgage rates are, savings---bonds, cds, stock investments, credit card debt management, credit debt management in general.

Over time we will write about some of the different aspects of personal money management and how to be better at dealing with this complex issue.

Let's start off by saying that dealing with our personal finance issues is much like running a business. Money comes in (from personal income) and money goes out (financial obligations). With a bit of discipline we may have some left over (profit) at the end.

One sure way to know if there will be a "profit" is to establish a budget. This will take some time to establish and refine so it will be accurate. We will probably begin here in our next blog.