By Michelle P. Sharrow, MBA

In this column I’d like to take a step back and look at the act of budgeting and savings in an attempt to help those who may be having some difficulty sticking with it or that are feeling discouraged trying to live life and have fun within the confines of one.

So what is budgeting?A budget is a written plan of income or money received less expenses or money going out. How do you budget?In simple terms you gather your pay statements, record that amount. Then gather your bills and subtract all of them from the income figure. Whether you do it with paper and pen or via a spreadsheet application, the key to meeting your goals through budgeting is to visit it often –at least once per pay period — and tweak it so that you always know where you stand.

Savings is simply income not spent. Saving is only achieved through planning and should be a part of your budget.Personal finance books encourage readers to save at least 10 percent each month.In order to ensure that you are saving, they encourage you to save that amount before you pay your expenses.Contrary to that advice, most families save what is left after they’ve paid all of their expenses and that’s if something is left.While, it is ideal to save 10 percent, you should do what helps you sleep comfortably at night with the long term goal of boosting your savings to that level.

I must admit that sticking to a budget has proven to be quite a challenge for me over the past few years.Primarily because I see a lot more money going out than I’d like to.So this written plan is actually a good thing for me mentally because it motivates me to modify my spending habits so that I can save 10 percent.

If you are looking for tools to help you budget more quickly and easily, check out your financial institution to see if they offer any free of charge by virtue of membership.One of the credit unions that I belong to offers a software package that creates colored pie charts that show you where your money is going.When I first started logging into my account on a regular basis, I kept seeing this message that read, $150 spent in the past 10 days. What was it spent on?At first I ignored it.But after a while, it became quite annoying to see this day in and day out, so much so that I clicked on it to see exactly what it was.Low and behold, I was able to set spending limits for each major category such as food, entertainment, and clothing. I was also able to set e-mail alerts to tell me when I exceed those limits.Now it serves as another reminder of where I am with my money.

The only way to meet your financial goals is to stick with your budget. Put it in your smart phone, your daily planner, or whatever item you carry every day as a constant reminder of where you are and where you want to be.

Michelle Sharrow

Michelle Sharrow

Michelle P. Sharrow, MBA is a seasoned freelance writer specializing in personal finance. Based in Waldorf, Maryland, she holds a Masters Degree with a concentration in Finance. Michelle provides a monthly column on ways to help families maintain their finances and stick to a budget titled, Budgeting and Savings for Families.

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