This article is part of Financial Literacy Month.

I’ve never been a budgeter. Budgets seem too prescriptive to me — I prefer to use a “spending plan” instead. But after a month as a full-time writer, I suspect a budget may be in my future. My income is fine, but it’s highly variable. I’m accustomed to a steady, consistent paycheck, and I don’t have that anymore. I also have some savings goals that I’d like to achieve, and budgeting may help.

While poking around for budget tips, I found an old Liz Pulliam Weston article about how to build your first budget. Though this piece is targeted at recent college graduates, the information is applicable to anyone trying to develop a budget for the first time. Weston writes:

Putting together a…budget is crucial if you don’t want to spend your way into serious problems. You’re also developing a habit that can serve you well throughout your life. “You’re committing to managing your money instead of letting your money manage you,” said economist Kathy McNally, head of financial literacy for the National Foundation for Credit Counseling. “The earlier you start, the better.”

You’ll probably find it helpful to first track how you’re spending money now. Review one of your recent bank statements to get an idea of your current monthly expenses and your monthly take-home pay. Then track every dime you spend for the next three or four days to learn where your discretionary money goes.

Weston recommends the 60% solution budget (which I mentioned in one of my first posts). With this method, you divide your gross monthly income as follows:

  • 60% to Committed Expenses such as taxes, clothing, basic living expenses, insurance, charity (including tithe), and regular bills (including things like cable).
  • 10% to Retirement.
  • 10% to Irregular Expenses such as vacations, major repair bills, new appliances, etc.
  • 10% to Long-Term Savings/Debt — money set aside for car purchases, home renovations, or to pay down substantial debt loads.
  • 10% for Fun Money to be used for dining out, hobbies, indulgences, etc.

I’m still not convinced I’m ready for a budget, but I’m giving it serious consideration. Maybe I could start by creating a budget just for the business.

[MSN Money: How to build your first budget]

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