Creating a budget makes becoming financially sound easier

   Most of us have the feeling that budgeting is an arduous process, but it's really very simple. We do need to spend some time collecting our monthly income and expenses. Once we've collected all these numbers it's just a matter of doing a monthly review to stay on track.

1. Get your monthly bills for the last six months and list all monthly income you receive.

2. Create a list of all monthly expenses fixed and variable. Including our walking around or pocket money on the expense side of our ledger builds some flexibility into our budget.

3. Total all expenses in one column and all income sources in another.

   More income than expenses! Great!  Add a savings program into our budget.  More expenses than income, work needs to be done in the budget process. We will need to look at variable expenses first to see where savings are possible. We could be spending too much on luxury or entertainment items. Look at how much walking around money you've been budgeting every month and cut back a little at a time, if necessary. When debt payments are a large part of our budget expense, focus on paying it down. When we eliminate debt  from the expense side of our budget, we create the positive cash flow that allows us to save. Isn't saving the reason we create a budget in the first place? Finwiz with contributions from Catherine P.