Budgeting Bliss: Creating a Plan that Works for You

Budgeting does not have to be a task that involves extreme restriction. I look at creating a budget as giving my money instructions on where to go. Have you ever had extra money in your bank account and didn't have a plan for those funds only to find out that you were lacking in an area?

Ask yourself where am I with my finances? What are my goals for the next three, six and twelve months? Perhaps you want to use the money you'd spend on your morning cup of coffee and put it in a savings account to take a trip home for Christmas. Do I have any special occasions such as birthdays, weddings, class reunions in the near future? Perhaps you have some home improvements planned? These all need to be added to your budget so that you are not caught off by surprise and do not put yourself in debt.

When I created my first budget after college I had one goal in mind - to pay off my student loans. This was a very idea but I had an unbalanced approach - I paid all necessary expenses, gave up eating out, did not buy anything for myself outside of essentials and put all of my extra money towards paying off my student loans. Needless to say that got old very quickly. This all or nothing approach left me with fear, guilt and regret. I felt bad if I bought anything (even a t-shirt) for myself. I'd criticize myself for not putting more money towards my debt. I was not saving money and felt I had nothing to show for paying down the debt besides the total balance getting smaller.

I lived at home with my mother for a few years after college and was able to dedicate extra income to pay down debt. I had some initial success and paid off two student loans. Then I needed to get repairs and new tires on my vehicle. Because I didn't save money, I had to create a new budget plan which included saving a portion of my paycheck.

The other reason this was a bad approach is because if you're too restrictive, your plan can backfire and you overspend. Much like someone who diets and restricts themselves, they may "cheat" and eat a "forbidden food" which could lead to overeating.

Be sure that your budget includes necessities such as housing, utilities, food, internet, phone, as well as savings, car fuel, personal care expenses. You may want to give yourself a modest entertainment budget so you don't feel like you're depriving yourself. Also include any insurance, home owner association fees, warranties, loan and credit card repayments in your budget.

Need additional help with getting started with budgeting? Check out this resource.