By Amy Fontinelle

Budgeting is an important component of financial success and one that's not difficult to implement. Let's recap what we've learned in this tutorial:


  • Budgeting isn't just for poor people or for times when money is tight or your life is undergoing a major transition. Budgeting is for everyone because it makes it easier to achieve financial goals of all shapes and sizes, whether that goal is to stay out of debt next month or to pay cash for a sports car.

  • Budgeting allows you to make long- and short-term projections about your financial situation, prevent crises, get the most out of your money, plan for major life changes and enjoy peace of mind.

  • Budgeting systems - ranging from a simple notepad and pen to online financial management software - are available for all needs and preferences.

  • Budgeting monthly, rather than by the paycheck, can help you learn to take a longer-term view of your finances. (For related reading, see The Beauty of Budgeting.)

  • Keep track of all your expenses, not just the big ones. Those daily lattes can add up!

  • Getting a basic sense of your financial picture is an important component of budgeting. Make sure you know how much you make after taxes and how your required and optional expenses fit into that picture.

  • Being flexible with your budget categories and allowing yourself affordable rewards will prevent budgeting from being a drag and help you stick with it.

  • A well-maintained budget can help you meet short-term goals, like saving for a vacation, as well as long-term goals, like saving for retirement.

  • Avoid budgeting mistakes like being so frugal it makes you miserable or ignoring the time value of money. Since you've already learned about these and other common budgeting mistakes and how to correct them, you probably won't make them. If you do mess up, remember that you're only human. Forgive yourself, correct the mistake if possible and vow to do better going forward. (For more, read Get Your Budget In Fighting Shape.)

  • A budget should evolve as your circumstances change. Don't expect the budget you made at 25 to still work for you at 35 or even 27. Your income and expenses will change over time, often annually. For example, if you get a raise, you'll want to adjust your budget to reflect how you want to spend or save the extra money.
As long as you're spending within your means each month, a budget is a great tool for helping you sleep soundly at night. You know where your money's going, you know that you're on track to meet your financial goals and you know that you've planned to weather the storms that will arise from time to time. If your spending is too high for your income, a budget serves as a pesky but necessary reminder that you need to change things - and the sooner you listen to those irksome numbers, the better off you'll be. Living paycheck to paycheck only works temporarily - sooner or later you will have an expense you can't meet or a goal you can't achieve if you don't learn how to budget.







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