You and your budget: Live within your means

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By creating and following a budget, you may have a better chance of reaching certain financial goals — and budgeting may not be as difficult as you think.

Budget basics — Getting organized

A budget is simply an estimation of your monthly income and expenses. Following your budget means striving to earn and spend close to what you estimated.
To make a budget work, you need to record where all of your money goes. One way to do this is to save your receipts from every purchase you make, whether it be with credit cards or with cash. If the store doesn't give you a receipt, request one. Also, keep an accurate record of the checks you write in your check register.
Periodically, spend an hour or two going through your receipts and check register. Record those expenses in budget categories, such as groceries, entertainment, automobile repairs, vacations, savings and investments, mortgage payments, taxes, charitable contributions, and any others you deem necessary. The more budget categories you create, the more accurately you can track your expenses and determine areas where you may be spending too much or too little.
At the end of each month, see how your actual spending stacks up against your budget. You may want to adjust your budget if your actual results deviate significantly from your original estimates.

Save time with computer software

If you would like some guidelines, consider purchasing financial planning software, such as Intuit's Quicken or Microsoft Money. Either package could help you save time — and maybe money — in computing your monthly budget.
With the software, all your expenses are entered into simulated check registers where you allocate each expense to a budget category. Best of all, no legal pads, erasers, or Wite-Out will be necessary. You can create monthly or annual budget reports that automatically update each time you log in money spent or received. You can also correct an entry you made in your check register months ago and your current balance will be recalculated automatically.
Yes, budgeting will initially require some extra work and organization. But a little extra effort now can go a long way toward helping you target your financial goals.

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