Budgeting — beyond the basics

[To comment: larry@larrylitwin.com]

This is Tip No. 16 from Larry Litwin’s The ABCs of Strategic Communication and More ABCs. Both should be part of your strategic communication library.

1.Budgets are a necessary evil.

They’re the only practical way to get a grip on your spending so you can make sure your money is being used the way you want it

to be used.

2. Creating a budget generally requires three steps.

• Identify how you spend money now.

• Evaluate your current spending and set goals that take into account your financial objectives.

• Track your spending to make sure it stays within those guidelines.

3.Use software to save grief

• Quicken®

• Microsoft Money®

4. Don’t drive yourself nuts.

Once you determine which categories of spending can and should be cut (or expanded), concentrate on those categories and worry

less about other aspects of your spending.

5.Watch out for cash leakage.

If withdrawals from the ATM machine evaporate from your pocket without apparent explanation, it’s time to keep better records.

6. Spending beyond your limits is dangerous.

But if you do, you’ve got plenty of company – but it’s definitely a sign you need to make some serious spending cuts.

7. Beware of luxuries dressed up as necessities.

If your income doesn’t cover your costs, then some of your spending is probably for luxuries – even if you’ve been considering them

to be filling a real need.

8.Tithe yourself.

Aim to spend no more than 90 percent of your income. That way, you’ll have the other 10 percent left to save for your big-picture


9. Don’t count on windfalls.

When projecting the amount of money you can live on, don’t include dollars that you can’t be sure you’ll receive, such as 

year-end bonuses, tax refunds or investment gains.

10. Beware of spending creep.

As your annual income climbs from raises, promotions and smart investing, don’t start spending for luxuries until you’re sure that

you’re staying ahead of inflation.

Source: www.money.cnn.com/pf/101/lessons/2/

[To comment: larry@larrylitwin.com]