 Now that you understand the meaning of the word “Budget”, budgeting is an important component of financial success. It's not difficult to implement, and it's not just for people with limited funds. Budgeting makes it easier for people with incomes and expenses of all sizes to make conscious decisions about how they'd prefer to allocate their money. It is very easy to overspend by spending what you don’t have and before you know it you’re barely keeping your head above water. The key to spending within your means is to know your numbers and to spend less than you make. A good monthly budget can help ensure you pay your bills on time, have funds to cover unexpected emergencies, and reach your financial goals. Know your numbers: 1. Itemized Income - what is your combined household income? Using the form/worksheet provided below, write down the dollar amount next to each income source such as; salary, tips, social security, disability, food stamps, any sort of residual income, etc. The expenses are divided into two categories – 1. Fixed Expenses Fixed expenses are considered to be your monthly reoccurring expenses such as; rent/mortgage, utilities, car loan, insurance, credit card bills, etc. 2. Flexible Expenses Flexible expenses are considered to be luxury not necessity; entertainment, dining, recreation, travel, etc. 2. Itemized Expenses – how much does it cost you on a monthly basis to take care of your household? Not many of you can answer this question. Using the form/worksheet provided below, you will write down the estimated dollar amount next to each itemize expenses such as; rent/mortgage, credit card bills, car loan, utilities, etc. 3. Figure out the difference - Do the math Now that you have completed the two columns (I.e. Income and Expenses) I want you to total each one of them up. Once you’re done, take your income number and subtract it from your expense number – Do you have a positive or a negative number? A positive number means you are spending less than you earn – congratulations! A negative number means you are living above your means – it’s time to trim down some of your unnecessary expenses so you can live within your means and create cash flow. How easy was that? Way to go, you have just created a budget. The final step to this exercise is to keep on track with your budgeting.  
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