Do You Need a Budget?

Despite what most people think, “budget” is not a dirty word. Granted, it's not as great a word as “vacation” or “windfall,” but there are much worse things in life than living with a budget. A budget is a schedule of income and expenses, usually broken into monthly intervals and typically covering a one-year period.

If your net worth is not where you'd like it to be, you've got a choice. You can increase your assets, or you can decrease your liabilities.

You could get another job, but it's nice to be able to sleep now and then. Or you could start playing the lottery and sit back to wait until you hit it big. Of course, chances are you won't hit it big, and the money you've spent on tickets will make your net worth even less appealing than it is now.

If increasing your assets is not feasible at this point, you'll need to cut back on your expenses. And that's where a budget comes in. Before you begin hyperventilating, understand that a budget doesn't have to dictate every penny you spend. You don't need to account for every pack of gum or cup of coffee you buy. A budget simply is a tool to help you get a better sense of where you're spending your money, and in which areas you could spend less. A budget is a good thing.

A Sample Budget Worksheet

We've created this sample budget worksheet that can serve as a guide for your own budget. Don't assume, however, that this sample is a universal budget. We all have different expenses. Be sure to take some time to customize the worksheet to reflect your own spending.

Once you've completed this worksheet, taking into account that your areas of expense may vary, you'll have a clear picture of how much you're spending.