The Makings of a Good Budget

Posted By: Dr. Frugal in Budget on 06/06/2007 at 08:27:43

Solid budgets are both realistic and flexible. Think of it like a map: a good map will show you multiple routes to your destination. Your budget works the same way--it should be dynamic and change to fit your needs. If you have four children your budget will be very different than if you have none. Same goes with home-ownership. As life changes, your budget should adjust accordingly.

The level of complexity of a reliable budgeting system should match the level of your time and interest. Some people are simply more detail-driven than others. If you're not one of them (I'm not), then your budget should be focused more on big-picture issues. Ideally you just want to devise a budget that you can live with for extended periods of time.

The budget will tell you the crucial parts of your financial story: how much money you have available, where your money is going and where it SHOULD be going. If your budget isn't telling you these things you might want to reconsider its layout.

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