what it does mean is that you can maintain control over where your money goes and enjoy greater financial confidence and success 
the specifics of budgeting will depend on your personal financial situation and goals in most cases though the approach is the same no matter where you stand financially follow these seven steps to create your budget and adjust it as needed to reach specific financial goals once you ve created a budget you may have to do some juggling especially in the first few months this means adjusting spending here and there so that you stay within your planned budget for income and expenses and be sure to put it in writing if you see it and commit to it you ll have more incentive to stick to it 11 budgeting myths that can block your successbudgeting is a wonderful tool for managing your finances but many people think it s not for them it s important to become aware of budgeting myths the erroneous logic that stops people from keeping track of their money and allocating it in ways that benefit them most then you can create a budget that can help you live within your means reach important goals and build lasting wealth here are 11 budgeting myths getting and keeping a handle on your monthly income and expenses allows you to make sure that your hard earned money is being put to its highest and best purpose for those who enjoy an income that covers all bills with money left over a budget can help maximize savings and investments if one s monthly expenses typically consume the lion s share of net income any budget should focus on identifying and classifying all the expenses that occur during the month quarter and year and for people whose cash flow is tight the budget can be crucial to identifying expenses that could be reduced or cut and minimizing any wasteful interest being paid on credit cards or other debt generally speaking you don t need to be great at math to make and follow a budget first of all understanding general concepts relating to your income spending debt saving and allocating your funds are important then the basic ability to add and subtract is most of what s called for that s especially true if you re budgeting manually with pencil and paper and now thanks to budgeting software programs math barely enters into it you simply have to be able to follow instructions many of these programs are free and legitimate or if you know how to use spreadsheet software you can make your own ledger it s as simple as creating one column for your income another column for your expenses and then keeping a running tab on the difference between the two no one s job is truly safe if you work for a corporation being laid off due to a difficult economy downsizing or a takeover always is a possibility if you work for a small company it could die with its owner be bought out or just fold you should always be prepared for a job loss by having at least three months worth of living expenses in the bank it s easier to accumulate this financial cushion if you know the amount you re bringing in and spending each month which can be monitored with a budget unemployment compensation is not a sure thing let s say a bad situation at work leaves you with no choice but to quit your job unless you can prove constructive discharge that is that you were virtually forced to resign your departure will be considered voluntary making you ineligible for unemployment insurance besides the benefits may fall well short of the wages you re used to in even the highest paying states the average is less than 500 per week 1budgeting is not synonymous with spending as little money as possible or making yourself feel guilty about every purchase the aim of budgeting is to make sure you re able to spend on what s needed and save a little each month ideally at least 10 of your income at the very least budgeting can make sure that you aren t spending more than you earn unless you re on a very tight budget you should be able to buy baseball tickets and go out to eat tracking your expenses does not change the amount of money you have available to spend every month it just shows you where that money is going and allows you to make decisions about changing your spending habits if you don t have any major savings goals e g upsizing your living situation starting your own business it s hard to drum up the motivation to stash away extra cash each month however your situation and your attitudes likely will change over time let s say that you and your partner live in new york city in a small one bedroom apartment and things are going fine for both of you until your family dynamic changes for instance you may have a child or an in law who comes to stay with you indefinitely this may mean you ll need and want more room to accommodate the new addition if you don t save up for anything big you may not be able to afford this change in your living situation down the road yes the catch 22 of student financial aid is that the more money you have the less aid you ll be eligible for that s enough to make anyone wonder if it isn t better to spend it all and have no savings in order to qualify for the maximum amount of grants and loans but that catch mainly applies to earned income whether you are an adult student going back to school or the parent of a student headed to college the free application for federal student aid fafsa form used for stafford loans perkins loans or pell grants does not require you to report the value of your primary residence if you own a home or the value of your retirement accounts 23so if you want to save money without compromising your financial aid eligibility you can do so by using your savings to buy a house prepay your mortgage or contribute more money to your retirement accounts the savings that you put into these assets can still be accessed if you face an emergency but you won t be penalized for it even if you employ all the available legal strategies to maximize your financial aid eligibility you still won t always qualify for as much aid as you need so it s not a bad idea to have your own source of funds to make up for any shortfall good for you but being debt free without any savings won t pay your bills in an emergency a zero balance can quickly become a negative balance if you don t have a safety net budgeting can help you create one it s never a good idea to count on unpredictable sources of income this may be the year that your company is unable to give you a raise or as much of a raise as you hope for the same is true of bonus money tax refunds are more reliable but this depends in part on how good you are at calculating your own tax liability some people know how to figure how much they ll get in a refund or how much they will owe as well as how to adjust this figure through changes in payroll withholding throughout the year however changes in tax deductions irs regulations or other life events can mean a nasty surprise when you prepare your tax return if you re still not convinced that budgeting is for you here s a way to protect yourself from your own spending habits set up an automatic transfer from your checking account to a savings account that you don t see regularly i e at a different bank schedule the transfer to happen right after you get paid if you are saving for retirement you may have the option of contributing a set amount regularly to a 401 k or other retirement savings plan this way you can pay yourself first have enough money for the transfer and know that you can meet your savings goal sometimes budgeting just isn t a priority because you have too much on your plate but there are certain government programs that can help you manage your household expenses for instance the supplemental nutrition assistance program snap helps recipients of all income levels work with their food budgets to make their benefits go further 4at the very least set up that budget so you get a feel for spending limits any change in how you originally planned to allocate your funds whether you re paying all you can to get rid of debt or whether your slipping too far into debt budgeting conceptsin general traditional budgeting starts with tracking expenses eliminating debt and once the budget is balanced building an emergency fund but to speed up the process you could start by building a partial emergency fund this emergency fund acts as a buffer as the rest of the budget is put in place and should replace the use of credit cards for emergency situations the key is to build the fund at regular intervals consistently devoting a certain percentage of each paycheck toward it and if possible putting in whatever you can spare on top this will get you to think about your spending too you should only use your emergency fund for true emergencies for instance if you lose your job and need to pay for expenses you could tap into your rainy day fund until you join the workforce again you can also use this money if you have an unexpected medical emergency that arises you would save money if you used your emergency fund to eliminate credit card debt but the purpose of the fund is to prevent you from having to use your credit card for paying for unexpected expenses with a proper emergency fund you will not need your credit card to keep you afloat when something goes wrong once you have a buffer between you and high interest debt you can start the process of downsizing the more space you can create between your expenses and your income the more income you will have to pay down debt and invest this can be a process of substitution as much as elimination for example cancel any recurring subscriptions that you don t regularly use or need use half of the money you save to invest for a goal or to pay off outstanding debts save the other half to bulk up your emergency fund although eliminating expenses entirely is the fastest way to a solid budget substitution tends to have more lasting effects so consider people can sometimes cut too many expenses so that they end up with a budget that they can t stick to substitution in contrast keeps the basics while trimming costs once you have your budget in place and have more money coming in than going out you can start investing to create more income it is better to have no debt before you begin investing if you are young however the rewards of investing in higher risk high return securities like stocks can outweigh most low interest debt over time keep your receipts so that you know exactly how much you spend each month this can help you determine how much to budget for any expenses that may change from month to month sticking to a budgetyou ve got your budget set up now you ve got to stick to it but that credit card still calls your name your clothes budget seems awfully small and you feel deprived at such moments it helps to revisit the whole reason for a budget to help you manage your finances achieve financial goals and lead a life free from fear of financial pitfalls your budget can keep you out of overwhelming debt and help you build a financial future that will give you more freedom not less so think about the future you want and remember that keeping to your budget will help you get there adding to your debt load on the other hand will mean that your financial future could be less bright every time you enter your spending in your software or budget notebook review everything that s been spent to date and compare it to income received this will keep you abreast of where things stand and encourage you to keep at it especially if you are reining in your spending as intended this daily or weekly activity can give you an enormous sense of accomplishment and keep you on track make it more difficult to make impulse purchases in other words set up barriers that give you time to think is this purchase necessary opt out of retailer email lists remove your stored payment information on your favorite online shops so you can t just click to order adjust your phone settings to block tracking and advertising as much as possible if you feel like you re the only one in your group who is on a budget search for some like minded folks you could find an online forum a monthly meeting or even a couple of friends who will listen to your concerns and share their budgeting experiences set up accountability calls with your frugal buddies to talk things over and keep temptation at bay just know that you re not the only person setting sensible financial limits for yourself there s something powerful about handing over a stack of 20 bills for a purchase you have to confront the money you re about to spend and accept that the spending is worth it swiping a debit card on the other hand may not feel nearly as real similarly paying bills by writing checks and promptly entering the sums in your register keeps you up to date on how your account is affected in a way that autopay doesn t you don t have to use cash exclusively or completely forgo online payments but handling transactions in hands on ways can make you realize how much you re spending and enhance the power of self regulation if you constantly look at what you have to give up the very act of budgeting becomes distasteful a mixture of long and short term gifts to yourself will help keep you motivated 