There Are Two Parts To Your Budget Equation

Reasons to Add Fun Money to Your Budget

Many people only consider reducing their expenses when times are tight. But, there is only so much your budget can take in the way of belt-tightening. There are two sides to the budget equation. Another way to tackle the problem is to look at the other side of the equation. You can help your struggling finances by increasing your income as well. Understanding The Accounting Equation Or Budget Equation On the first day of an accounting class in college, the professor put the accounting equation on the board. It is an equation that drives the financial world. Assets – Liabilities = Equity. To put it another way in a budgeting aspect, your income – your costs = what’s left at … Read more

The Surprises You Discover When You Make a Budget

make a personal budget

make a personal budgetMost of us, at one point or other, start a budget. Some of us are natural budgeters. It just makes sense on some level to these people. But, there are often many surprises you find when you make a personal budget.

Carefully managing every dollar is wise. So, why wouldn’t you do it? Well, for other people this isn’t so easy. Just because budgeting is sensible doesn’t mean they do it regularly or rigorously.

Along with working out three times a week, eating many helpings of vegetables a day, and performing preventative maintenance on the water heater, just because something is smart to do doesn’t mean we always get it done.

The thing is, once you carefully make a personal budget and follow a budget for at least one month, you start to learn some surprising things about yourself and your spending habits. The image you have of your finances in your head likely does not correlate to reality in any realistic way. In some cases, we learn that things are better than we thought (hooray!), but in most cases, we learn that our money is being wasted more than we wanted to think.

This is one of the main reasons people don’t budget in the first place. There is a sense of dread that, once personal finances are examined, so many problems will reveal themselves that it will take too long to fix them, with too much tough work expended along the way.

It’s the same impulse that keeps us away from the dentist office, even though we haven’t been in a couple of years or more. We know that going will repair the damage, but the process is so uncomfortable that we put it off, sometimes indefinitely.

However, you manage to screw up the courage to perform your first budget, make it happen. Take a careful look at every dollar you spend for a month, and track exactly where it goes relative to your budgeting goals. Many people discover things that surprise them. Here are just a couple of examples.

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