“A small leak can sink a great ship.” — Benjamin Franklin

BudgetingBudgeting… that’s a topic that can be a conversation buzz kill at a cocktail party. So while it’s not the most riveting subject matter, it’s fundamental to establishing a good financial plan and worth giving it some thought.

In this week’s budgeting column at Kiplinger.com entitled How to Plug the Holes, the writer suggests: “One good reason to endure the occasional drudgery of budgeting is that it alerts you to trouble while you still have time to do something about it. You’re forced to find out why your expenditures are climbing and to take action. If you start picking up distress signals, run your budget through these checks:

  • Are you buying too much on credit?
  • Are you behind the times?
  • Did you create a straitjacket?
  • Are you doing somebody else’s thing?”

That last check means that we can’t live by somebody else’s budget. Perhaps what works for you, might not work for your sister or your best friend. For example, sacrificing the daily latte is easy for me, while for others this is what gets them through their morning commute and each sip is worth the three bucks and change spent day after day.

So for starters, begin to think of your budget as a planning mechanism, a way to set and achieve goals. According to Dave Ramsey, “Unfortunately, the word budget has gotten a bum rap – it is basically just a PLAN. When you budget, you’re spending on paper, on purpose, before the month begins. But many people view a budget as a straight jacket that keeps them constrained. Freedom and budget just don’t seem to go together.”

“However, when you see that a budget is just spending your money with intention, you’ll actually experience more freedom than before. Many people say they’ve found even more money when they created a realistic budget and stuck with it.”

This was John experience. Be sure and catch his new weekly series here at Queercents entitled, Almost Debt Free, where he writes about how he’s getting out of debt by living on a budget:

“My debt reduction experience was a tumultuous undertaking. I’ve worked long, strenuous hours to make more money; I’ve strained friendships with my unavailability; and I’ve had to completely re-evaluate my priorities, my interests, and an overall understanding of myself. I wouldn’t recommend the militant approach I applied to debt reduction. It is the last year of being in my twenties, and I essentially had a freak out several years in the making. I can’t complain really. It was vitally important for me to be prepared to jump into my thirties with a brighter financial future, and that’s what I have accomplished.”

How is he doing it? John is adamant about understanding and tracking his expenses. There are many programs out there, but why spend the money when you can just tailor your own Excel spreadsheet to your needs. Click here for his sample.

Not as frugal as John and would rather subscribe (some of these have fees) to something that’s already been created, then here’s the list for you: 15 Cool Tools for Easy Expense Tracking and Budgeting.

It doesn’t really matter what program you use, the first step with budgeting is getting a handle on where your money is going and that just means track, track, track. Once you know how you’re spending then it’s easier to apply some analysis and fine tune the budget so that you have a plan that works for you.