The Art and Science of Creating a Budget




Start getting money smart.

You may have a hundred other things you'd rather do besides sit down and make a budget. Avoidance is a big factor in money worries. The longer your money runs amok, the bigger unseen issues can grow. It's time to train your money to do what it's supposed to do: Work for, not against, your future.

There's no shortage of financial advice in books, on TV, and saturating the Internet. But how do you know which is right, and which doesn't make sense for your situation? It's simple. There are three essentials for any budget, and those don't change. For everything else, it's a case-by-case basis.

Budgeting is part artistic endeavor and part science. The science part isn't as difficult as it might seem, and the art is up to you.

Acquaint Yourself with the Budget Trifecta

The three most basic elements in every budget are income, expenses, and evaluation. U.S. News and World Report calls refers to these elements as income, expenses, and "the moment of truth." This is the science part, because these elements are known to work. In truth, you could scale this back to two elements, income and expenses, but that doesn't offer much help toward goals.

The first thing you need to know is how much money is coming in. This might be a paycheck from an employer, investment dividends, child support, or anything that makes money appear in your hand or checking/savings account.

The next part is a bit more difficult, and no less important. Expenses are where your money goes. Account for rent or mortgage, utility bills, credit card payments, student loans, car insurance, groceries, and discretionary spending such as a pack of gum or candy bar. Whatever you pay out every month is an expense.

The last element is evaluation, and it's arguably the toughest one. This is the part where you examine your expenses and determine whether your money is being spent well. Even if it is, it could probably be better.


A little work now can pay off (literally) down the road.

Add Your Own Special Art

Once you know what you've got, where it goes, and what you'd rather have, then you can move forward with goals. No two people have identical goals, income, or expenses, so this is where your creativity and personal ideas can help.

Perhaps you want a dream vacation. Or maybe the most appealing thing is a savings account that could tide you over for a few months. If debt is a problem, you can add that to the list of things to tackle. Whatever you want to achieve goes on the list of goals.

Finding money for your goals is another art that varies from person to person. If there isn't enough to redirect, you'll have to consider alternative measures. You could take on a part-time job for extra income, drop an expensive cell phone plan, or cut cable. CNN Money warns that you should watch out for luxuries that you consider necessary. It's up to you.

Putting it All Together

Creating a budget isn't a chore with budget software. Using the most advanced products, you can keep track of account balances, pay bills, direct money to savings or other goals, and see the whole picture at a glance.

Once you have a plan and an easy-to-navigate platform to use it, staying on track takes doesn't have to dominate your life. In time, good spending and saving habits become second nature, and you can move on to the next phase of goals.

Mint.com has lots of ways to help you manage your money. From a simple, no-frills budget to a plan that sees years into the future, all you need to get started is a free account. Sign up for yours today!


Carole Oldroyd writes about personal finance and finding a budget that works.