A basic budget plan is knowing how much income you will have, how much
money you will spend, and how much money, if any, will be left over. Using
the information available to you from your check register you only know
how much money is available at that moment. It doesn't inform you of how
much you will need to get through till the next payday or if there will
be enough money, after paying all your bills, to allow you to make that
purchase you're contemplating.
If you were paid a fixed amount once a month there is a very easy way to
budget your money. You could take a stack of envelopes and label them
with the names of all the bills and expenses you will need to pay during
the upcoming month. They could be "Rent", "Utilities", "Car Payment",
"Food", etc. Then you would place the amount needed to pay each expense
into it's envelope. When all the envelopes had the required amounts, the
money left over, if any, is the "expendable" money that you are free to
spend on non-budgeted items.
As you paid each item you would obtain the required money from the proper
envelope. At the end of the month any money left in an envelope could be
redistributed along with the new months income and you would be ready to
start over. Using this system you would always know how much money you
had available by simply inspecting the envelopes. Any deviations from
the "budgeted" amounts is quickly observed and corrections could be made.
While this type of budgeting is very simple, it is not practical for most
of us. First, it requires that all payments be made in cash. This alone
will eliminate the plan in all but a few cases. Also, most of us have an
income that is spread out, in one form or another, during the month. A
weekly pay period is an example that would make the above plan very
difficult to operate.
An alternative to the use of actual envelopes would be to create your
budget on paper. You could project your monthly income and create
accounts from which to debit or credit money as bills are paid and income
A Sample Budget explains such a written type of budget.
There are many computer programs available that claim to be budget managers.
Some are just computerized check book registers. Some are complex
financial planning and management systems. And a few actually are budget
managers. One, MONEYCLIP, available FREE from this web site, budgets your money using the "cash envelope"
system previously described. Only with MONEYCLIP the "envelopes" are the
program's "accounts". MONEYCLIP has the ability to be able to compute
the monthly income that will be available, even though it is not presently there. Any variations in income amounts and monies paid out are computed and you know at any time just how your proposed budget is working out.