If you’ve heard one recommendation consistently from personal finance experts, it’s that you must create a budget to achieve your financial goals.  Simply put, a budget is your road map to financial success.  It allows you to establish control and be the boss of your spending, before your spending becomes the boss of you!

I personally equate having a budget to the importance of having written goals.  Research has proven that people who write specific goals (and revisit them periodically) have a greater success rate when compared to people who have unwritten goals or no specific goals at all.  Therefore, your budget should reflect your money goals that you will write down (and revisit monthly) with these success factors in mind:

Budget to Your Paycheck.  When creating a zero-based budget, I’ve found success in budgeting according to the frequency of my income.   Unlike monthly budget templates, I’m paid bi-weekly, so to budget my monthly expenses I determine which expenses will be paid from check #1 and which expenses will be paid from check #2.  This exercise is driven by knowing your billing due dates, and will provide great insight into whether you are over-extending yourself financially by having too many bills due around the same time of the month.  In the event you find one paycheck is overloaded, simply call to change your due date.  Problem solved.  Reallocating a few payments can make a world of difference and allow you to better manage and control your cash flow.

Prioritize Your Spending.  As the boss of your financial destiny, you must prioritize your spending according to needs versus wants, or use the category levels I have outlined.  First,  list and allocate those required, non-negotiable expenses to meet your basic needs.  This is Category 1 and includes housing (rent, utilities), food (groceries, not eating out!), and clothing (work essentials or school uniforms).  Now layer in Category 2 which includes optional, but important expenses like debt repayments (car payment, student loans) and your personal savings.  Finally, input Category 3 expenses like eating out, Netflix, and memberships.  Category 3 expenses are luxury items which can be eliminated when attempting to fund Category 1 or Category 2 spending.

Assign Every Dollar.  Occasionally when budgeting, I will have money left over.   In my early budgeting days, I considered this “overage” a buffer to cover unexpected expenses or an additional savings deposit to be made at the end of the month.  However, I realized  that my “overage” was being quickly consumed by miscellaneous purchases and rarely resulted into a savings deposit.  With experience and education, I’ve learned to assign every dollar.   That “overage” should be assigned to your most important financial goals, whether that’s eliminating debt or saving for retirement.  Every dollar of income should be assigned to a budgeted line item, hence creating a zero-based budget.

“A budget is telling your money where to go instead of wondering where it went.”- John Maxwell

We want to hear from you. What are some additional tips or recommendations for those who want to be a boss and live by a budget?