Live on What You Earn: The Art of Personal Finance

We are a nation of planners. We plan our vacations, our holidays, even weekly chores with to-do lists. But when it comes to mapping out how we spend our hard-earned dollars, we often neglect the task. A budget is nothing more than a simple plan for our spending. It outlines the amount each month that we will spend, the amount that we will save, what items we will buy, and what items we can do without.

It is easy to spend money and at the end of the day not know what you spent it on. In order to change your spending habits and develop a budget you must begin a daily journal. For one month you will make a daily list of everything you spend. After the month is up go over the list and highlight all the unnecessary items. Seeing what you spend on paper will tell you exactly where your money is going and what items you can cut out of your budget. Take some of the unnecessary items out of your budget a little at a time and each month work on getting the budget to where it is manageable. After a while your budget should work for you and not be just another chore to keep up with. Your goal is to end up with a budget that is not overly restricting but one that you will be comfortable sticking with for a long period of time.

To begin, let's establish a base to guide you through the second and third month by pinpointing a few areas where expenses could be cut:

1. After tracking monthly unnecessary expenditures, average it down to weekly expenditures. Withdraw cash, but make sure it is less than the amount you spent last month. This cash is for any nonessential purchases for the month. You may run out of cash before the week ends, but there is only a few days left until the new week begins.

2. Track how many days each week you dine out. For the first month, schedule what days you will be eating out. Be sure to choose days that work best for your schedule, and remember that it's important to stick to the schedule.

3. Head straight for the clearance racks when you are shopping. Then check out the sales racks. Only buy things that are on sale. Periodically check out the clearance areas of your favorite stores. Accumulate your wardrobe one piece at a time, buying items at a discount instead of purchasing an entire outfit at once.

4. Taking the time to shop around for the best rates and looking for potential switching bonuses can save you money when getting a new credit card or changing one of the following services: satellite/cable, telephone, and garbage pickup.

5. To prevent incurring additional fees, only withdraw cash from ATMs owned by your bank.

6. Make a list before going shopping and stick to the list. You may want to comfort yourself in the store by knowing you can always return if you absolutely must to get other items not on the list. Chances are you won't, more money saved while avoiding the uncomfortable angst of this transition period. You want to succeed, do what works at the moment to avoid impulse spending.

Overall, remember reduce stress by starting with a snap shot of where you are spending money now, make a budget in increments, allow yourself a few luxuries as you go, don't be too hard on yourself. You want the budget to work over the long term. Create successes for yourself in the beginning, reevaluate over a period of several months, and a new lifestyle will emerge where you will be more in control of your spending and have less wasteful spending that will generate more cash flow for you as well.

[Article Source: http://www.positivearticles.com]

Most people plan what to wear to work, what to cook for dinner, where to go on a holiday and what to buy at the grocery store. We never seem to get around to planning a budget though, we just spend as we go. A budget can be quite a simple project listing what we spend our money on. You should include the necessities that you cannot change and the things that you buy but are really not necessary items. You will see in black and white where you money is going and for what.

Phil Rogers is a recovering Debt addict going on 15 years of living debt free. He now spends his spare time paying forward his knowledge to those who need help with debt reduction, set up a personal budget, and Planning

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