Write Things Down

This doesn’t mean you have to literally write down a budget on paper (which you can, if you want to).  But you absolutely need to get all of your monthly income and expense figures out in front of you so that you can create a plan.  If you don’t want to do it the old-fashioned way, you can create a spreadsheet, invest in budgeting computer software, or take advantage of any of the free budgeting tools you can find online.

Set Some Goals

Perhaps the greatest beauty of a budget is setting financial goals and figuring out how you are going to reach them.  Put some serious thought into deciding what you’d like to accomplish, and use those goals to prioritize your budget.

Establish Good Spending Habits

Once you have all of your monthly expenses in front of your face, it’s a good idea to trim the fat where you can.  Cut back on all unnecessary spending, as you see it, in order to free up as much cash flow for goals as possible.

Be Realistic

It’s possible that you are paying all of your living expenses for the first time in a long time (or ever), so you need to examine your monthly obligations and get them down to the bare minimum.  That new salary may seem like a lot to you, but you may be surprised by the reality of having to pay your rent, utilities, insurance, and more.  Be realistic about what you can and cannot afford, and you won’t get sideswiped.

Eliminate Debt

If you happened to get into some debt to get through college, then you might want to consider consolidating that debt into one, manageable payment.

The time after college graduation should be exciting, but for many, it can also be very stressful.  Keep financial stress at bay, and reach your goals in the process, by following these budgeting tips.

About the Author: Patty Kleen is a college graduate with minimal student loan debt. She enjoys writing about personal finance, budgeting, and money saving tips and is a regular contributor at creditloan.com.

Note: This post is for people that make enough to cover their expenses monthly. If you are still in debt, living over your means, or still a student with little or no income, please read on as you may find some tips, however, if you want to use this strategy, you need to have a maximum threshold for your spending.

2009 was the first year I ever used a budget. It will not be the last as I am planning on modifying it up for 2010.  I was shocked at the simplicity of creating the “ever daunting” budget. Today I will talk about how I set up my personal budget last year, and how I will be doing so this year.  If you feel I forgot something, feel free to leave a comment.  Let’s get to it.

Step 1: Write down infrequent expenses. These things can creep up on you and throw you off your budget plan, so be smart, list them first.  This may include gym memberships billed quarterly, car insurance billed twice a year, etc. (2 minutes)

Step 2: Know what you make. If you have a clear picture of your income this process will be easy. If you aren’t 100% certain, a ballpark estimate will suffice. Note: this is Net income, not gross. (2 minutes)

Step 3: Know what you want to spend. If you make a decent income and want to spend and save, you could probably live off of 90% of your income. Either way, if you net $30K, set your budget for $29K. If you can afford more savings make the gap between the number in step 2 and step 3 as big as possible. (1 minute)

Step 4: Subtract. Subtract the infrequent expenses from step 1 from the number in step 3. This will get you your total habitual spending forthe year I bet you can guess what is the next step. (1 minute)

Step 5: Divide by 12. This number (step 4 divided by 12) is the number we are going to work with. (1 minute)

Step 6: Create categories. This gets a bit harder here, but don’t stress. To give you a start, my categories for my budget are:

• Rent
• Utilities
• Groceries
• Other Food
• Hockey Expenses
• Going Out Money
• Entertainment
• Student Loans
• Car Payment
• Transportation
• Cell Phone
• Miscellaneous Expenses (for random expenses, dates, etc.).

These categories are flexible, so treat them as such an do what works for you. (2 minutes)

Step 7: The dirty work. Subtract your fixed expenses from the number we got in step 5.  If that number was $2000 and you have $800 in rent $200 in loans and $200 in a car payment you will have $800 to work with. (2 minutes)

Step 8: Don’t be frightened, break it down. If you have $800 start breaking it down to where you want to spend. If you like to go out, allocate the most you feel you can there.  Here is where you get to make priorities and decide where you want your spending to go. (3 minutes)

Step 9: Write it down. This process is an act of futility if you don’t wrote down how much you want to spend in each category. This should be an easy guide to stick to your budget. (1 minute)

Optional Step 1: If you have enough income and want to create a seperate yearly budget for something like shopping sprees, feel free to keep a note of how much you are giving yourself to spend. If you are someone that goes on a shoe buying frenzy, you won’t be able to keep to the monthly budget without this category, so implement it (this will be the biggest change for my budget this year).

Optional Step 2: Budget your savings. Is your goal in 2010 to max out your Roth? Then budget out $416.66 a month to make it happen and reach the $5000 max.  This will work with any savings goal.

It ain’t so hard and this is the method that works for me.  Some people are really strict with their categories. I don’t feel i can be.  Some months I eat out a lot and go over budget, but that likely means I am well under my grocery budget.  I just slide that money over for that month. The key is to stay under your monthly number from step 5, not for you to stress that you can spend $50 in entertainment the last week of the month but spend -$12 on groceries.

Best of luck.  An honest attempt with the 15 minute budget can really set your finances up for success in 2010.