Master Your Card

Face it: the word “budget” isn’t exactly the sexiest word in financing. It conjures up the images of the 1950s housewife, carefully keeping a list of expenses. It’s also just little bit nerdy - like that roommate in college who scheduled his time right down to those 30-minute Dungeons and Dragons meetings.A budget is only as fabulous as you are, dahling. That’s why you will want to create a budget that you can live with and maybe even be proud of. Here’s how you do it:

1) Figure out how much you bring in per month. How much you really make - not how much you would have made with overtime or how much you would like to make. Sure, it’s hard to face that tiny figure, but it must be done. Make sure that you look at how much you bring home after ‘the man’ has messed with it - that means looking at the total monthly sum after taxes and any other fees have been taken out.

2) Figure out how much you spend. Sure, there’s rent. But how about utilities and that newspaper you buy every morning? The easiest way to keep track of your expenses is to carry around a small notebook with you for a week. Every time you spend anything - whether it’s a quarter for the phone or two dollars for Girl Scout cookies - write it down. This lets you easily identify where you are hemorrhaging cash. If you buy coffee every morning, for example, but don’t have time to drink it, maybe it’s time for a new (and less costly) routine. Admittedly, this is the less-than-sexy part of creating a budget. That little notebook does become a pain in the butt. But you only need to keep track of spending for a week to guesstimate where your money goes during the whole month.

3) Take at look at what you spend. If you are spending more than you earn, you are headed right for huge pain city. You need to figure out painless ways to scale back spending (brown bag it or cancel your cable subscription, for example) or to increase your income.

4) Take out some nice paper and a good pen and write down the numbers. How much do you earn? How much do you want to put towards your savings each month out of that? Get that amount subtracted automatically from your account each month before it disappears or morphs into new shoes. What bill do you need to pay each month? How much is left over after that? How much do you need for living costs (clothes, food, etc.)? Whatever is left over is your fun money. If the amount is very small, go back to your bills and try to find ways to cut back on them. Maybe you could turn down your thermostat this month to save on utilities or maybe you can switch phone providers to save a few bucks.

5) Tweak your budget until it works for you. You will have to adjust your numbers as your spending habits and income change. The trick to make it all bearable is to keep things flexible. Once you have paid your musts - key bills and savings account money - try to keep things a little loose. Don’t budget down to every dime unless money is so tight that you absolutely have to. You might not end up with a budget that you want to hang on the fridge, admittedly, but you will end up with a plan that gets you from paycheck to paycheck in the black. And that’s a beautiful thing.

And for those who aren’t afraid of a little Excel action (or OpenOffice for us non-Windows people out there), I strongly recommend the Pearbudget Spreadsheet. It’s comprehensive, user-friendly, and (best of all!) completely 100% free! Yay! Download it here - but remember, for full effect you’ll still need to carry a trusty pen and paper around with you to record your day to day expenses.

Good luck, and let us know how it goes!