How To Make A Budget
That Actually Works

Are you wondering how to make a budget? You've come to the right place!

Let's jump right in.

Home budgets aren't rocket science. If take it step-by-step, you'll do just fine. But just like anything else, it pays to spend some time upfront reviewing the process, setting goals, and considering doing things a bit differently than you may have done it before.

Whatever you do, don't just jump right in and "do it like you've always done it". After all, the definition of insanity is doing the same thing over and over and expecting different results.

Your household budget is your plan--your blueprint, your roadmap--to financial success. Deciding where each of your dollars is spent will put you in a position to live in financial peace, or maybe even total financial freedom. It's worth investing a few hours to learn how to make a budget, and a few minutes every payday following and tweaking your home budget.

So, get started with our overview of the budgeting process, work your way through each step, review the helpful articles in our "How To Create A Budget That Works" section, and then enjoy the fact you're finally making a budget that works!

Overview Of The Budgeting Process

Here you'll find an overview of the budgeting process. You should read this section first.

It's critically important to have goals in mind before we show you how to make a budget. Why are you making a budget, anyway?

If you don't have goals, human nature will take over, and your home budget won't be as successful as you'd like it to be. (We're going to be talking about ways to overcome human nature quite often as we talk about how to create a budget.)

Step 1: Getting Organized

The first step in making a budget is to get organized.

During Step 1 we'll talk about setting up your personal finance files. Having all your financial information at your fingertips will be invaluable when it comes to making a budget, managing your budget, doing your taxes and paying your bills.

We'll also show you how what information is needed to get home budgets up and running.

Step 2: Income

This might be the most fun of all. Here we'll income sources, obviously needed when creating a household budget. You want to know how much money you have to "play with"!

When you're done with this step, you'll know how to create a budget that's organized by paychecks, instead of a monthly format. This makes it easier for you to match expenses to income, even out your cash flow and spend the same amount every time you get paid.

Step 3: Expenses

Boo. Hiss. Oh, the wailing and gnashing of teeth! This is what everyone dreads when creating a personal budget. It involves tallying expenses...and usually, facing reality.

If you do this step correctly, you'll have armed yourself with all the knowledge you need to finally get control of your finances. You'll have a grand total of how much money you actually spend in a week, month and year.

Step 4: Create A Budget

Once you have your home budget pay period selected, and your income and expenses tallied, it's time to begin creating a personal budget. This is the step where you divvy up all your expenses into pay periods and compare to your income from the same pay period.

Surplus? Great! Spend your surplus on debt reduction, saving and investing--until you reach zero. Deficit? Not the end of the world! Reduce expenses until you get back to zero. Evening out your cash flow and getting a "true" picture of where your money goes every paycheck will help you do this more efficiently than you ever thought possible.

Step 5: Tweak

Just because you make a personal budget that finally works doesn't mean you won't have to tweak it.

As you work with your home budget every payday, you're guaranteed to find budget categories that need to be adjusted up or down. It's a natural process. Set goals to spend less and earn more. As you do, increase your wealth by paying down debt, saving more and investing more.

Think of "tweaking" as "wealth-building"!

Step 6: Automate Your Household Budget

Automating your monthly household budget is critical to its success.

When you're done making a budget, automate as many transactions as you can. Use direct deposit. Put all fixed payments in a separate checking account. Automate savings, investments, and bill payments. The less money under discretionary control, the better!

More "How To Make A Budget" Help

When you're done visiting each of the links above, and have learned how to create a budget, don't forget to stop by our How To Create A Budget That Works section for articles that will help you learn more about personal budgeting than you ever thought you'd want to know.

Use this information to tweak your household budget and make it even more effective as time goes by. Some topics:

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