Steps in Preparing a Financial Budget

A budget can be a real hassle if you don't use modern technology. Outdated steps, such as writing down your expenses and categorizing receipts, can keep you occupied for hours just filling up spreadsheets and ledgers with every expense. Now, preparing a financial budget can be easily done once you know what you want to achieve, turn on your computer and decide which online tools you should use to reach your financial budget goals.

Instructions

1. Write out your goals for your budget. Keeping a budget is easier if you know your end goals, such as saving for a child's education or a down payment on a new home. Make your goals clear, reasonable and actionable for them to be successful. As you complete your budget, you're more likely to sacrifice today if you can clearly understand what you're saving toward.

2. List your sources of income. There are two ways to complete your budget. If you prefer to see where your taxes and deductions go, begin with your gross paycheck amount and deduct all of your tax-withholding deductions as expenses. If your goal is to control home expenses, begin with your net paycheck amount and list those expenses.

3. Detail all of your committed living expenses, such as groceries, rent or mortgage and auto costs. To avoid missing expenses, find a budget spreadsheet from a popular website such as Yahoo! Finance or CNN Money (see Resources). MSN Money recommends creating a target budget amount for expenses that are 60 percent of your income. The remainder of your income should be used for emergency reserves, retirement and such goals as education or major living expenses.

4. Check out online budget sites to track your discretionary expenses. Mint.com, Geezeo.com, and Wesabe.com are free budget sites that can help with tracking daily costs, a predetermined spending threshold or if your emergency fund dips. Banks now offer robust money-management tools as well. Check with your bank to see if it offers budget-tracking Web tools.

5. Create a budget meeting with everyone whom the budget affects. Half of the work of preparing a financial budget is involving everyone affected by it. If you have children, a spouse or a roommate who will use the budget, involve them in the process. This can prevent disagreements later about spending and make everyone aware of the priorities covered by your budget.

References

• National Endowment for Financial Education: Effective Strategies for Personal Money Management
• MSN Money: Your 5-Minute Guide to Budgeting
• Kiplinger: The Six Best Budgeting Sites
• San Fernando Valley Business Journal: Popularity of Online Banking Grows
• Pfizer: More Than Medication: Tighten Your Budget --- and Your Family Bond

Resources

• Yahoo! Finance: Budget Tools
• CNN Money: Ideal Budget