Eye on Entrepreneur > The "B" Word

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When my daughter Kelly was getting married in the spring of 2004, I asked my wife, Diane, what her budget was for the event. She replied, “I don’t do budgets!” And if you had attended the extravagant affair, you’d have seen that she doesn’t lie, either. The wedding was one befitting a royal princess. My wife somehow spent more money on the Oprah-recommended caterer than I spent on the purchase of our first house – including furniture. But then again, I do do budgets.

And I suggest you do the same – starting right now!

Do you have a handle on your debts? What expenses are throwing your cash flow for a nose dive? How much cash do you have available at the end of the month? At the end of the year?

I can hear my wife screaming in the background at the sound of that 6-letter swear word! I refrain from using the “B” word in her company. I’m no fool. But I don’t want you to be afraid of the word “budget.” The term doesn’t have to imply some scary, accountant-generated excel sheet that requires a masters degree in economics to interpret. It doesn’t have to be a financial contract signed in blood. And it doesn’t mean you have to do without. In fact, a budget’s best goal is to reveal information that will enable you to make choices.

There’s a choice you have to make in everything you do.
And always keep in mind, the choice you make, makes you.

That’s a little poem from my best-selling book I Feel Great and You Will Too! that seemed appropriate here, because a budget truly tracks how you are making your choices – your spending decisions – which will determine if you will be glad or sad. After all, it’s not your conditions, but rather your decisions that determine your destiny. The good news is that a budget provides you with the power to take control of your choices and decide if the money is being spent the best way possible. For example, during my annual family budget review I was disgusted with the monthly amount – specifically within the housing account - I was paying for our cable TV expense. It seemed an outrageous waste of money. So by eliminating all of the premium channels except HBO, we saved $56 monthly, resulting in a savings of $672 yearly. And even though this may not seem like a lot of money, it’s the little changes that make the big difference. As Ben Franklin said so pragmatically, A small leak can sink a great ship.” And I not only want to stay afloat, I want to cruise on to my destiny.

But I never ever would have realized the savings in the cable account, or by curbing any other expenses, had I not kept tabs on when and where I spend my money. Creating and adhering to a budget requires a positive and passionate mindset. I don’t think of my budget as a penny-pinching sacrifice. No, I treat my budget in the same manner as I do my to-do list. It’s a tool that, when used properly and reviewed diligently, can keep me focused, guarantee progress, and sail me to success.

Just like a to-do list, a budget has the ability to help you achieve your goals – financial goals first – one step at a time. And I’m here to help you through those steps. Adhering to your budget, well, that’s a whole different matter altogether. Like a fitness plan, your financial plan requires a generous dose of discipline to do what must be done to achieve your desired goals. Too many people start out with the right intentions in developing their budget, only to use it as an orderly system for living beyond their means.

I don’t know of any financially successful individual – or business for that matter – that doesn’t create and adhere to an annual budget. It’s one of the earmarks to financial success. But most people never put pencil to paper and develop a budget as part of their personal financial plan. And guess what happens? They tend to live beyond their means and fight an uphill cash flow battle the rest of their lives – which can easily lead to a host of other problems.

As the saying goes: it’s the start that stops most people. Once you get your spending patterns down on paper, your budget becomes like a road map. It enables you to see where you are, where you want to go, and how to make the correct choices to help get you there. Without the budgetary map, you still might make financial progress, but you might also end up taking the longest, most inconvenient, and most expensive route. Then again, you might never get to your desired destination.

Obviously, there’s plenty of software on the market to help you organize your finances, like Quicken and Microsoft Money, but right now I want you to look below to the Budget Worksheet. In addition to this worksheet, you’ll require your banking statement or an electronic record of your checks for the past month and any cash receipts you received when you purchased cash items. What, you didn’t keep the receipts when you went grocery shopping? Oh, you don’t remember how much you spent for lunches last month? You don’t have the amounts you spent on gas or tolls or haircuts or birthday gifts or pet products or medications for the month? I didn’t think so. But don’t feel bad because most people don’t have a clue on how much they spend a month – until it’s too late or they’re too far into debt. Start today! -- PC

BUDGET WORKSHEET

ACCOUNT	EXPENSE	MONTHLY	YEARLY
Housing
	Mortgage/Rent	$	$
	Telephone/Cell Phone	$	$
	Electric	$	$
	Water	$	$
	Heat (oil/gas)	$	$
	TV (cable/satellite)	$	$
	Internet Access	$	$
	Furniture/Electronics	$	$
	Maintenance/Condo Fees	$	$
	Landscaping	$	$
	Home Improvement Loan	$	$
Transportation
	Automobile (Loan/Lease)	$	$
	Gas	$	$
	Repairs/Maintenance	$	$
	License/Registration	$	$
	Parking/Tolls	$	$
Food
	Groceries	$	$
	Lunch	$	$
	Dining Out	$	$
Healthcare
	Medical Co-Payments	$	$
	Dental	$	$
	Medications	$	$
	Medical Appliances	$	$
Insurance
	Health	$	$
	Auto	$	$
	Home/Rent	$	$
	Wind/Flood	$	$
	Life	$	$
Legal / Accounting
	Legal	$	$
	Accounting	$	$
Personal
	Clothing	$	$
	Jewelry	$	$
	Laundry/Dry Cleaning	$	$
	Haircuts/Makeup/Manicure	$	$
	Memberships (clubs)	$	$
Recreation / Entertainment
	Movies/Concerts/Shows	$	$
	Magazines/Music/Books/DVDs	$	$
	Nightlife	$	$
	Pets/Pet Care	$	$
	Hobbies	$	$
	Vacation	$	$
Savings
	Savings Account	$	$
	Retirement Contributions	$	$
	Christmas Fund	$	$
	Vacation Fund	$	$
	College Fund	$	$
Taxes
	Real Estate/School	$	$
	Social Security	$	$
	Federal	$	$
	State	$	$
Miscellaneous
	Education/Tuition	$	$
	Student Loan	$	$
	Charity/Donations	$	$
	Gifts	$	$
	Childcare/Babysitting	$	$
	Personal Loan	$	$


TOTAL EXPENSES		$	$