It might seem that developing a budget should be a basic task for any working person, but many people are simply not comfortable using spreadsheets, balancing their checkbooks or creating a formal budget. Some folks aren’t disciplined enough, others don’t consider themselves “number people” and find the thought of putting a budget together daunting.

Regardless of the excuses not to do it, everyone will find it in their best interest to make the effort to outline their expenses and income even if it requires getting some help from someone else. A basic budget needs to include monthly income and expenses, projections of increases and decreases in those amounts and a little buffer for the unexpected.

If you feel uncomfortable using spreadsheet software, just write your basic income and expenses out on a piece of paper. If you are open to using a spreadsheet (which will make it a lot easier to track and tweak things), many options are available for free these days such as Open Office ( or Google’s online spreadsheet (

To assemble the basic budget, divide the spreadsheet or page into two columns. In the first column, list income that you have (benefits, interest, paycheck, etc). In the second column, write down all your monthly expenses (costs) including all of your regular bills, typical grocery costs, gasoline, etc. I’ve found the easiest way to find out these numbers is to look at the last few months of your bank statement and try to break up most of the expenses into categories that you can track on your budget. You don’t have to be exact, but lean to the conservative side if given a choice. After you’re all done with the income and expense columns, add another 10% for unexpected expenses.

Now that you have created your basic budget, you can start to reap the benefits. You have the basic numbers, now you can tweak them to project different scenarios. Make another hypothetical budget that shows monthly income and expenses, just like before, except this time project what it would be like if you could eliminate some of your ‘luxury debt’.

On your hypothetical budget, exclude monthly credit card payments, take out your monthly auto loan payments and eliminate 25% of any ‘impulse buy’ amounts that you found while you were categorizing your expenses from your bank statements. After your done, sum the total of these three numbers.

These three numbers represent the amount you could conceivably avoid paying every month. If the total is even 10% of your monthly expenses (and for some it’s higher), you are paying a substantial amount of your income to charges that could be avoided.

No one but you can decide whether that 10% overhead you pay is worth what you get in return. Your desire to have items before you can pay for them outright is weighing you down with debt. Every dollar you owe someone else is a dollar less that you can spend how you’d like on things that you would really appreciate (be it saving for the future, buying a treat for yourself, or saving up for a more significant cost that you see in the future).

As you debate your options, consider this, saving that 10% APR paid on $2,000 for one year is $110.00. Many people pay only the minimum monthly payment, which amounts to much more. That’s $110 you are paying just to have $2,000 dollars worth of stuff a year earlier. Also, look at how much of that $2,000 worth of stuff is still around. Did you buy long lasting items that really better your life or did you spend most of that at restaurants on dinners, on clothes you’ll likely not wear next year, or on gadgets that you forgot about long ago.

Only you can decide which is worth more to you, having something early or freeing yourself from debt, but developing a budget will help you make those decisions rationally and seeing it all on paper will often help people really see where their money is going.