A budget is more than just a dreaded term

You may have decided you need to budget. And if you have, you may wonder just what a budget is. Contrary to popular belief, it's not a scary thing that happens to be written in some lost foreign language or computed by rocket scientists.

A money plan?

Yes, simply put, a budget is a money plan. A good plan will see to your financial health. It's all about tracking the money you have and knowing where your cash goes. You know, money going in versus money going out -- your income minus all expenses.

A handy income definition to have in your back pocket

The IRS Form 1040 defines your income as any taxable gain or profit that can come from such sources as a paycheck, social security payments, distributions from Individual Retirement Accounts, pensions, and interest received. All these can be verified by W-2 forms, 1099 forms, and 1040 forms from the federal government.

Budgeting expenses and other sundry costs

Now it's time to look at the expenses side of the equation. What do we mean by this term? Your expenses are all major and incidental costs, charges, and fees. Rent and mortgage payments are some of the larger ones while entertainment/leisure costs tend to be smaller.

Budget for what's important to you

Whether it's a car payment or a cup of coffee, it still draws money away from you and is cash you can't get back. That's not to say you can't have that cup of coffee, but just be aware of how much it's costing you and how important it is to you. From there you can decide if you need to cut back on your buying frequency or continue on as before.

Putting it all together for one budget that works for you

A healthy budget is a plan that allows you to spend less than your income. There are many different roads and methods all leading to this one destination. How you choose to get there is based on your wants and needs. Only you can decide which road best suits you and your lifestyle.