Why Budgeting ?

You are not alone if you're an over spender or deep in debt, US national deficit indicate clearly that we are a nation of over spenders.

If you're an over spender or deep in debt, the main thing to tell yourself is that you are not bad and you are not alone. Our national deficit indicate clearly that we are a nation of over spenders, so bucking the tide and becoming financially responsible in our society is not easy. In fact, sometimes this work fells downright heroic.

You'll need to take a closer look at each item on your cash flow statement. Is that item essential to you? Can that item be eliminated or its usage reduced in some way? For example, let's look at your utility costs. Is there a way to save money in this area of your spending plan? Can you lower the thermostat in the winter to 69 degrees and raise it in the summer when you are using the air conditioner? Do you turn off lights and fans that aren't being used? If your water is metered, do you have leaky faucets, do you water your lawn daily, take long showers, or run the eater while brushing your teeth? Small changes on your part can turn into immediate savings. Tackle the telephone bill next. Where can you make changes? Can you e-mail your friends or look into a lower-cost long-distance carrier? Do you need all of the features you currently have? Do you see where I'm going with this?

Do this with each item on your cash flow list. If you analyze it, you may find some easy ways to make an immediate impact on your saving. Be ruthless. Stopping for coffee and a bagel each morning at Dunkin' Donuts can prove expensive over time. It's $1.50 for the coffee and $1 for the bagel. Every day for a week would equal $12.50, which translates to $50 a month and $600 a year. Of course you need your coffee, but can you make it at home and carry a thermos with you to work? Can you buy bagels by the dozen, keep them in the freezer, and pop one into the toaster in the morning? Now you'll have to purchase the coffee beans and the bagels, but this small lifestyle change could save you over $450 a year. Those dollars can to to pay down debt or go into your 401(k) plan, and if we assume a 10 percent return in 20 years, it will be worth $25,800. Small change does add up.