Friday, October 9, 2009

Guest Blog: A Budget That Works for You

Creating a personalized budget is simple once you determine what percentage of your monthly income is to be set aside for bills. You start by totaling all your debt and all sources of income before you can decide what amount can be designated per expense category.

List essential categories first, followed by other basic monthly bills. For example, Utilities, Food, House, and Medical will be the top priorities. Expenses such as Family, Clothing and Transportation will come next, followed by the non-essentials: Entertainment, Debt and Investments. Here is a break-down of these categories:

Utilities: water & sewer, gas &/or oil, electric, telephone (wireless &/or land-lines)

Food: eating out, groceries, snacks, or lunches; using coupons when grocery shopping offers extra savings, especially for sale items.

House: mortgage or rent payment, repairs, property taxes

Medical: prescriptions, health insurance, co-pays or relevant out-of-pocket costs

Family: child support, alimony, or child care

Clothing: work, school, formal occasions, uniforms

Transportation: repairs and maintenance, gas, auto payments and insurance: also includes buses, subway, or toll booths.

Entertainment: vacations, subscriptions, club memberships, movie rentals or cinema tickets, satellite or other television services

Debt: student loans, credit cards, business loans

Investments: 401K, Christmas club, stocks, savings accounts, or college funds

Don’t overlook the occasional, miscellaneous expenses such as birthdays, weddings, anniversaries, and unplanned special occasions. Other expenses to plan ahead for are the seasonal ones like swimsuits, summer camps, field trips, new clothes and shoes for school, and school functions.

One easy way to start your budget system is to buy a cheap coupon organizer, create your categories and for each one, put in the allotted amount of cash. Be sure to take care of the essential expenses first. Taking this first major step sets you on the path to becoming free of debt and effectively managing your hard earned money.

A budget that is customized for you is vital for effective money management. Keep in mind that your debt was not created overnight and a budget is simply a tool that’s useless unless put into action. It may take a few months before you see the positive results of sticking to your budget. Creating your own budget by using these categories of basic expenses is the fastest and easiest way of reducing your debt and learning how to properly handle finances.

If you need more precise guidelines to help you start the process of building your own budget, there are many resources available to you. Several of these can be found on the Internet simply by doing a search on “budgets” or “how to do a budget”.

Debbie Dragon is a freelance writer providing articles for, a site that helps it's readers save money, with unique money saving tips and tricks for your busy lifestyle.