How to Use a Budget

Once you've gotten control of your money, make a plan to use it wisely.

So you've created a budget -- good job! However, your work isn't finished. It's not enough to merely track your income and expenses. You actually can use a budget to plan your finances. If you want to expand your business, for example, or save up to purchase a new home, you need to use your budget to help you achieve your financial goals.

Things You'll Need

• Paper, pen calculator
• Computer with spreadsheet program (optional)
• Documents: Bills, tax info, loans, income, checkbook
• Patience and perseverance

Instructions

1. Track your purchases and sources of income regularly, and establish a system to review your budget at the end of each month.

2. Divide your budget into categories that tally your income and expenses. Making sure to include a category for savings. Once you've budgeted a certain amount for each category, keep track of how close your actual numbers are to the amounts you budgeted.

3. Make appropriate adjustments for all categories once you can predict your spending and income patterns. Look for areas of waste or redundancy or examine how you can cut costs and increase savings.

4. Work to develop and zero-balance budget. That means that every dollar that comes in has a a destination before you even earn it. You should know how much you will make, spend and save, and it should match your budget at the end of the month. By doing so, you eliminate impulse-purchases and start the cycle of operating your business or household within your means.

Tips & Warnings

• For professional financial advice, see a certified public accountant or consult a representative from your bank or financial institution.

• The above information is for educational purposes only.

References

• Microsoft Business: 8 Ways to Make a Budget Work
• Dave Ramsey: The Truth About Budgeting