A budget makes no judgement

It is so common for someone to say to me 'I just don't know where all the money goes'. Sometimes we feel really out of control. Feelings of shame and guilt can creep in. We say to ourselves 'why am I not better with money?' or 'if only I could figure all this out'. If you feel like this, the best thing you can do for yourself is set up a budget. But first, you have to realise that a budget makes no judgement; it's a tool that tells us the truth. All is does is record how much money is coming in and where it is going out.


Once you have a budget in place and learn to use it well, it can help deliver your lifelong dreams. Budgeting will help you increase your savings and therefore boost your wealth. Think about it - the one element you can control is your spending. If you increase your spending (assuming other elements remain the same) you automatically become poorer and have fewer choices. The flip-side is simple.

Not sure where to start? First list all your sources of income - don't guess, go back and look at the numbers. Then do the same for your expenses - again, don't guess. Look through your accounts - credit card, debit card, checking accounts. Cash is more difficult to track, and you may need to estimate here.

Next, allocate your expenses to a category such as; rent, mortgage, utilities, insurance, entertainment, vacations, childcare, education, clothing, auto, groceries, meals out, medical and dental. Add or delete categories as appropriate for you.

Working through this often surprises people. 'Wow - I had no idea I spent so much eating out'. Increasing your awareness of the categories that you might be able to reduce is important in increasing your net savings.

Essentially, it's a truthful look at how you can sacrifice in the short term for what you want in the longer term.