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Clean that dirty closet – make a budget

May 10, 2010

“Self-discipline is a form of freedom. Freedom from laziness and lethargy, freedom from the expectations and demands of others, freedom from weakness and fear — and doubt.” – H.A. Dorfman.

After you have tracked all of your spending for a month, it is time to come up with your plan for financial freedom: The budget. At first, many people balk at making a budget. They feel overwhelmed or they are not sure where to start. Others think a budget will limit them to what they can do on a monthly basis. Today, I want to give you a few tips on how to start a budget.

The first step is to get the categories for your budget in place. Put your take-home income at the top of the page. This will let you know how much you can spend. Also, look at what expenses are being taken out of your paycheck.

You do not have a choice on some items that are taken out, such as your taxes. But, you may be taking money out of your paycheck that are not necessary. For example, I signed up for a life insurance plan through my employer where they automatically took the money out of my check every month. After shopping around, I found I could find the same amount of insurance in other places for a lot less, so I recently made the switch, which in turn gives me more money in my paycheck.

Secondly, make a list of your expenses. Start with the necessities. Put the items on there you need to pay every month, including food, shelter, transportation and utilities. After these, jot down items that will harm you if stop paying them on a monthly basis, which may include other debts you may have.

Make sure you include items you do not have to pay every month, but will have to pay annually, bi-annually or quarterly, including car registration and insurance. From there, you can add other categories of expenses, such as clothing, eating out and entertainment.  If you want a form to help, I recommend the following website:

A major concern for many people is a budget will limit what they can do. This can be true, but in many cases, self control actually leads to freedom. Many people get to the end of the month and wonder what happened to their paycheck. They look back and see they spent a lot of money, but are not sure where they spent it. The budget will allow people to tell their money where to go, instead of wondering where it went.

A good analogy comes from, which compares a budget to cleaning out a cluttered hall closet. You know the one — a closet you are afraid to open lest you be hit on the head by a cascade of falling junk. The one everyone puts things into, but never takes anything out of.

Picture that closet in your mind for a moment. Now imagine taking everything out and laying it all on the floor where you can see it and study it.

Then, give the closet a thorough cleaning, and perhaps install some new shelves or racks inside. Finally, put everything back in an organized, neat arrangement. Do you know what? You will have more storage room than when you started, and you did not get rid of anything!

However, it might be that when you have all the junk on the floor, you decide you can probably do without the muddy pair of galoshes with the holes in the bottom, or the broken baseball bat, or the jigsaw puzzle with half the pieces missing. If you get rid of some items, you have even more room in the closet.

On a note of caution, your first budget probably will not be right. Do not get discouraged; take this as an opportunity to look back on where you were off and adjust for the next month. After a few months you will find you are getting better at figuring out where your money is coming from and where it is going.

This is when things will start to get exciting. As you get more organized, you will feel like you gave yourself a raise as you can account for every penny every month. It also will help you get traction on some of your long-term financial goals, which can include paying off debt and saving for retirement. You will find a sense of control with your finances that will allow you to sleep better at nights, be more productive at work, and give you hope for a better future. The first step is just to get started.

Become a great wonder. Master your finances today!

2 Comments leave one →
  1. May 17, 2010 4:23 pm

    I love reading your articles! Great for the right brained mind person, like me!

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