Budgets are one of those things that everyone wants to do but very few are successful at it. They require work and discipline. People fail to realize this when they set out to get their monetary house in order. I hope these guidelines help:

Know your Income - You can only spend what you make so the first step is to calculate your income.  Finding a $100 on the street is not income so only include reliable income streams to help keep your budget within practical limits (that means exclude overtime and holiday pay as well).

Calculate your Expenses - Generally expenses fall into two categories:

1 - fixed expenses: These include things like rent, insurance, car payment, etc. These are the bills that you have to have in order to live your life and never change month to month.

2 - variable expenses: These are things like cell phone, groceries, dining out, etc. They are never the same every month and change depending on the standard of living you want.

Track your Expenses - Don’t think your are capable of tracking your expenses in your head because you’re not (unless your Matt Damon in "Good Will Hunting").  Develop a system. Keep all of the receipts and record the expenditures daily.  Use software like Excel or MS Money if you are so incline.

Don’t over Budget - The big reason people stop following budgets is they over budget. Even if you think you can live off of peanut butter sandwiches you shouldn’t budget as if you were because its not practical. Eventually you’ll get sick and tired of your limited options and will drop the budget out of frustration. Always calculate a bit more into your budget because in the end you don’t have to always have to spend everything that your budget allows for.

Include Money for an Emergency Fund - Unexpected expenses happen and you should be ready for them. If you don’t have an emergency fund and something comes up then you’ll most likely have to abandon your budget to see it through.  Depending on the severity of the issue you may never implement your budget again. Set some money aside monthly and you’ll save the budget and your sanity.

Don’t forget Fun - You only have one life and you should live it. Set some money aside to do the things you enjoy. This could be a trip, dinning out, or just a simple movie. Always add a little extra to the pot to live life because that’s what we are here for.

-mfd-

Related posts:

1. Tools To Track Your Budget
2. How We Structured Our Finances And An Ongoing Concern
3. Your Credit Card Is Your Budgets Best Friend
4. Net Worth Update - The Beginning