Most people hate to make a budget.
It's not all that hard. It doesn't require advanced mathematics, or even that much time. Budgeting is just about making choices. Usually, it's choosing what you can do without.
There is no one right way to make a budget. A budget is just a simple equation:
If SAVINGS is negative, then you're spending more than you're earning.
It's not important that your budget be precise to the dollar. You just want a general sense of how much you can spend without borrowing money or eating into existing savings.
Here are some tips to prepare an effective, efficient budget:
1. Don’t forget to deduct income taxes. Gross income does not equal take-home pay.
2. Don't fool yourself. Don't lie to yourself.
3. Review and revise your budget every three months.
4. "Money in" does not mean appreciation in assets. Stock and housing prices fall just as easily as they rise.
5. Include an estimate for unexpected costs into your expenses.
"I'm doing my best to cut back.... I'm down to three vacation houses and 10 cars." - LL Cool J
Read more about how to develop self-discipline, or check out the work-in-progress book 'Street Smarts 101: Lessons Textbooks Miss.'
Click here to learn more about the book The Skinny On Willpower.
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