How To Prepare A Personal Budget

Should I prepare a personal budget?

Budgets are great if people can follow them. That's the problem. In my profession, its called the B-word, because no one wants to talk about budgets. There's a euphemism, and it's called a spending plan. Spending plan sounds great because its all about spending. Honestly, I think the best approach is this analysis of the cash flow, and looking at the income, looking at the expenses, categorizing the expenses as far as, "Are they negotiable? How can I reduce each of these?" The next step is critical - and this is where budgets kind of fail - and it's coming up with those goals, looking at the goals that you've created earlier, and coming up with dollar amounts for those. Maybe that trip to Disney World: there was a dollar amount associated with that. That gives the motivation to reduce some other expenses, so you've got the income that you can now put to that goal that you have every single month.