Why Everyone Needs a Budget

Hi,
Sound financial management begins with being aware of both income and expenses. Having a good salary is meaningless if we don't know where it goes every month. Everyone has different criteria for how they use money. It's necessary to select a budget model which enhances personal criteria. There are hundreds of models one may use to create a budget. I am going to discuss three budgeting methods I tell people about, since in my experience, most financial situations can utilize one of these models:
1) Green light budget: low maintenance, low energy
2) Yellow light budget: financial situation needs to be brought back into balance.
3) Red light budget: high maintenance, high energy, drastic action needed.
Today I'll outline my concept of green light budgeting, and explain yellow and red light budgets in future blogs.
People who can use green light budgeting are people who are on sound financial footing, and want to ensure that they remain that way. If you want to use this approach, spend a few hours each month recording your expenditures either manually, or using various computer programs. This will keep you aware of any large fluctuations in expenses and allow you to deal with them in a prudent manner. After following this model for a year, you will be able to identify payments which occur quarterly, semi-annually and annually. You will find these figures on your bank statements and credit card statements. The purpose of this low maintenance budget is to essentially track spending in order to maintain financial stability.
Tomorrow I'm going to talk about yellow light budgeting for people who feel as if their financial stability is begining to erode.
Until then,
Alan