Armchair Millionaire Community Bulletin: Real-World Budgeting

Getting a grip on your day-to-day spending will do wonders for achieving your most important long-term goals. Designed and used correctly, a budget will do more than just keep you a step ahead of your bills--it will be the key to successful saving.

New York, NY (PRWEB) March 29, 2005 -- All budgets fall squarely into two categories: ones that work and ones that don't. The difference? Budgets that don't work are created with elements of fantasy--what people wish they were saving and spending. Budgets that do work are based in real-world experience and provide workable guidelines for your spending and saving.

We recently asked members of the Armchair Millionaire community to tell us what works for them when it comes to budgeting. Here is just a little of what we heard:

"My wife and I follow a 25/15/60 allocation. 25 percent of our gross is savings (automatic), 15 percent goes to our church and favorite charities and the 60 percent left over pays all our taxes and living expenses. It is actually pretty simple method and it works!" --SMK

A budget boils down to just four things:
1. Projecting what you think you'll spend (or want to spend) in a particular time period (usually monthly, but could be quarterly or even yearly) on particular categories of expenses (examples: utilities, car, entertainment)
2. Projecting your income over the same time period and from particular categories (examples: your job, your spouse's job).
3. Tracking what you actually spend and earn over that time period.
4. Comparing the difference and using that information to improve your spending decisions.

Even though it's a straightforward process, many people still are not successful when it comes to budgeting. My guide provides the secrets for making your budget work.

The Armchair Millionaire's Tips for Making Budgeting Work
Identify your true motivation. Budgets fail because people associate them with sacrifice, penny-pinching and doing without. Go at it from a different angle. What do you really want to achieve? College for the kids? A secure retirement? A budget is just a tool for achieving these dreams. Unless you know where your money goes, you can't make good spending and saving decisions that will ultimately enable you to achieve your goals.

Leverage software. Toss out the pencil and paper and turn on your computer. Personal finance programs all include budgeting components, making it quick and almost painless. And most banks nowadays let you log on to your account and download your transactions right into your program, saving you the step of entering them yourself. Quicken and Microsoft's Money are two of the best programs available.

Get real. If you're feeding a family and spending $600 a month on groceries now, you're not going to suddenly cut your spending to $200 just because you that's what you've budgeted. Likewise, if you're saving nothing now and barely making ends meet, simply budgeting in $10,000 for saving each year is not going to make it happen. Don't set yourself up to fail. Be realistic about what you can do and set achievable goals. If it helps, make changes in your spending habits incrementally.

Dig out the intelligence. The real value in budgeting is not in telling you that your cell phone bill was 15 bucks higher last month than you'd anticipated. Understanding that you had a shortfall of $500 in your savings category is. Use this kind of information to adjust your spending so that you are able to achieve your savings goals.

If all else fails, put saving first. We plan our spending in order to be able to save. A surefire way to always make your savings goals is to pay your self first--save an amount automatically and don't worry about spending what's left.

The Bottom Line: Getting a grip on your day-to-day spending will do wonders for achieving your most important long-term goals. Designed and used correctly, a budget will do more than just keep you a step ahead of your bills--it will be the key to successful saving.

The Armchair Millionaire Weekly Survey: Everyone has a different definition of risk. What's yours? Log on to www.armchairmillionaire.com and let us know.

Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at www.armchairmillionaire.com.

Contact Information:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com

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