Write it down

Habakkuk 2:2-3 NKJV Then the Lord answered me and said: “Write the vision And make it plain on tablets, That he may run who reads it.  For the vision is yet for an appointed time;
But at the end it will speak, and it will not lie. Though it tarries, wait for it; Because it will surely come, It will not tarry. (you knew this was coming, didn't you?) :-)

What is your vision for your finances? What do you want to accomplish? Do you want to save more money? Pay off debt? Make a large purchase? 

Answer these questions before you begin with establishing a budget. It is very important to know why you're setting a budget because the "why" will help you stick to it.

Now that you've sorted through your finances to determine what your monthly income and expenses are and you have your vision in place, begin creating your budget (WRITE it down). Note: You do not have a budget if it's in your head and not on paper.

Begin by first writing down your fixed monthly expenses. These are things like tithes, mortgage, rent, daycare, car notes, insurance, and savings.  These items are the same amount each month. Then write down your variable expenses which is everything else that you allocate funds to each month.  Variable expenses such as food, gas, utilities and miscellaneous expenses can be budgeted based on how you've spent money in these areas in the past.

Spend some time and play with the numbers to get them to look how you want them to look if possible. Add another line item for the extra amount of money you want to save or the additional payments you want to make towards debt. Remember that your budget is yours and it needs to reflect your vision for your finances. Keep in mind that it takes time to reach financial goals so don't give up or become anxious if things do not look the way you want them to look at the time.

One thing that I do to manage the family's finances is to set the budget based on when the income comes in (by paycheck).  Things look a lot different based on when bills are due. I think this is a more realistic approach because it allows you to see exactly how your money is being spent every time money comes in. It will also help eliminate "thinking" you had x amount of dollars left in the bank (or in your budget) when you really don't. I'm a huge fan of writing things down so you really need to keep a check register and write down every purchase as soon as possible. Do not keep track of purchases in your head (no matter how good you are at this). 

Does your financial picture look anything like what you thought it looked like?