How to Create a Budget
Here are the basics of money management to help you take inventory of your finances and set goals.
The world is mesmerized by money. A rack full of newspapers and magazines and a truckload of newsletters devote themselves entirely to chronicling the use and abuse of money. Cable TV beams money-related programming day and night. The Internet is jammed with money-minded Web sites. Money is a top-ten topic of family conversation, too.
Considering that the subject occupies so much of our time and attention, isn't it amazing that so many people have barely a clue about how to handle their own money? Amazing maybe, but no mystery: Americans typically manage to navigate 12, 16 or more years of very fine formal education without ever learning how to balance a checkbook, size up a stock or resist a fast-talking salesman of bad financial ideas. So here are the basics of money management, from setting goals to budgeting to figuring out your net worth.
Take a Financial Inventory
Find out what you own and what you owe, then track where your money goes.
Look at Cashflow
Take the time to find out where your money is going on a day-to-day basis.
Build Your Budget
Think of your budget as a means of setting and reaching your goals. Here's help to get you started.
Plug the Holes in Your Budget
If you start picking up distress signals, run your budget through these checks.
Set Financial Goals
The most important step toward financial security is to translate it into your own terms.