One of the fundamental items we have not talked about yet is budgeting. Go ahead, Run for the hills! Seriously, it's a topic we need to understand and use. Without a budget, the $1000 emergency fund is difficult. Without a budget, how can you get out of debt? Without a budget, there is no room for a fully funded emergency fund, or cash reserves.
Isn't budgeting hard? Don't I need to use some complicated software program, or make a crazy spreadsheet to do it? Isn't a budget to prevent me from having fun? Well, Ye...Urm...I mean NO!
A budget is a very simple tool to tell YOUR money where to go. You make the categories, you define how much you want in them, and the key is to stop spending in that category when you reach the amount. If you must go beyond the amount, a meeting with a spouse or accountability partner is needed.
A budget must also be 0 balanced. This means every dollar you make has a place in the budget. There is no excess money in this plan. It doesn't mean you can't save, it means completely opposite.
Budgets must be in your business and your personal life. Do what works for you and stick with it. It will take you a few months to get the hang of it. Once you do, it will become even more simpler. Remember though, every month is different.
One of the coolest things about budgets is that you can break things up into "monthly payments." I don't mean putting it on a credit card, or financing. What I mean is say you want to spend $500 for Christmas. Take $500 over 12 months, you will save $41.67 per month.
Here's an example of a household budget.
Total Monthly Income after tax: $1,200
Here's an example of a photography budget
New gear: $300
Create your own categories, and put in your own numbers. You will be amazed at what things you are spending your money on.
Doing this post make me think, "I don't have a budget separate for my photography. I should create one." So, I'm still learning.
For some budget forms check out Dave Ramsey's website.
I am not a financial adviser, nor a CPA, so please consult with them if you have any questions for your own personal situation.