A budget is a very important tool when you are trying to meet financial goals. It helps you to see where your money is going and therefore helps you determine where you can cut back. It also gives you something to go by when you get paid rather than piddling your money away. If you are serious about managing your money, a budget is an absolute necessity.

When my husband and I first got married over 14 years ago, we had no idea of how to manage our money. Well, my husband had a little idea, but not me. I worked but I was very frivolous and piddled my money away. We always had a hard time paying our bills because of this. I had nothing to show for my money except make-up, restaurant reviews and other un-necessaries. Then my son came along and changed all of that. I wanted to be a stay-at-home mom.

We also wanted to have more money to travel, save for retirement and college funds, and purchase our own home. This was our motivation for preparing a budget. We knew we had to start managing our money better to be able to do these things and it seemed impossible to have any of it at the time but we had to start somewhere. You should do some thinking as to why you'd like to have more money. Everyone wants to have more money for some reason or another. When you think of reasons, write them down at the top of a piece of paper. This will help you stay on track and give you motivation to stick to your budget.

So anyway, we made a budget and we stuck to it because we had our goals in the back or our mind -- first and foremost, to be able to stay home and raise our son. The way we made our budget was to list out everything we HAD to pay to live. We listed rent, power, garbage, phone, gas and food and the amounts we paid on them in a month. Then we listed our credit card bills and the monthly minimum payment amounts. We listed miscellaneous for items like clothing or birthdays that come up. You can list your budget list on the paper that you listed your reasons for wanting to save/manage money. You'll have to put some thought into some of these items such as food and gasoline. Be sure to be accurate and honest about how much you spend on these items. Look back into your checkbook and add it all up. If you write down less than what you actually spend, it will be harder to cut back.

Once we had made our list of everything we had to pay, we looked at it to see if there was anywhere we could cut back. We saw that we could probably cut back the money we spent on food by using coupons, shopping sales and discount stores, so we lowered the amount we originally budgeted. We saw that we could probably cut back the amount of money we spent on gasoline by making fewer trips to the store, only driving when absolutely necessary, etc. So we lowered that amount also. We vowed to cut back on our power usage -- turn off lights when leaving a room, dry clothes on the line, wear sweaters so we can set the thermostat lower, etc. We stuck to these amounts and made it.

At first we didn't have any money left after paying our necessities but that was okay because we had a roof over our head and I was able to stay home and raise our child. As my husband got raises then eventually started his own yard service, we began to have a little extra money left after our budget was paid. This enabled us to go out once in a while and add a new amount onto our budget called `savings'. Our savings account is where we strive to save for vacations, home improvement, retirement funds, etc. We currently put 20% of our income in there.

Within a few years, we were able to purchase our own house, remodel it a little at a time, make our credit card bills smaller (we eventually hope to be rid of them), buy a nice car and truck and visit Disneyland and Knott's Berry Farm. The reason I tell you this is to show what can happen if you do make a budget and stick to it.

About The Author © 2001, Monica Resinger Monica is a married, stay-at-home mom who is a freelance writer and publisher of three home and garden ezines. To read more of Monica's articles, go here: http://www.geocities.com/plantldy.geo/articles.html If you like this article, you will probably like Monica's newsletter `Creative Home Money'. It features articles like this and reader's questions and answers about living frugally and making money from home. Subscribe by sending a blank e-mail to: CreativeHomeMoney-subscribe@egroups.com