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Personal Finance
What Constitutes a 'Good Budget'?

Michael Killian -- It's 2010, a chance to start anew, and possibly be better prepared than you were last year. For tips (or a refresher) on how you can better manage your finances for the next 12 months and beyond, read on.

What makes up a good budget? What expenses should you include in the budget? What can you do about variable expenses in your budget? How can you personalize a budget?

Where are you going?

The key to a good budget or spending plan is knowing where you have been and where you want to go. Knowing where you have been is done by insuring you have written down where all you money has been going. You can find this information by categorizing and reviewing your last 6 months of check registers or other accounting methods you have been employing. If you have no such method in place, you have just uncovered your main budgeting problem which is the first item to be corrected.

If on the other hand you use a check register or other means but have numerous general entries such as "cash" or "miscellaneous" or other unidentifiable labels, this too must be corrected. You MUST know where your money is going before you can divert it. I recommend carrying a small spiral notebook for at least 2 weeks (longer is far better) and recording every cash transaction. I have never had a client or student do this who has not come back to me amazed by what they had learned from this experience.

Budget labels

Once you have a record of all your expenses for a decent period of time, the remainder of the budgeting process is relatively easy. The following labels can be used to guide you in listing what debts and expenses go where in organizing your finances. Nothing from the list below is written in concrete. So adjust the labels to suit your particular needs. Where an entry is variable, enter a monthly average based upon past history and expected futures.

Here is a suggested list of budget items:


-- Your Income
-- Spouse's Income
-- Other Income


-- Fixed Expense
-- Rent (not mortgage)
-- Other Housing
-- Child Care
-- Child Support
-- Alimony
-- House Insurance
-- Car Insurance
-- Medical/Dental Insurance
-- Life Insurance
-- Other Insurance

Variable Expenses:

-- Utilities
-- Phone
-- Cell
-- Cable
-- Internet
-- Other Utility
-- Transportation
-- Food
-- Clothing
-- Medical Expense
-- Personal
-- Entertainment
-- Savings

Other Variable Expenses:

-- Secured Debt - Those bills/debts which have a tangible asset (Mortgage, Auto, etc)
-- Un-secured Debt - Those debts which offer nothing tangible that can be taken from you for non-payment (credit cards, medical bills, etc.)

Federal guidelines for household budgets

The following are recommended percentages for household expenses. They are offered by the federal government in bankruptcy counseling nationwide. They should be used only as guidelines.

-- Housing 25%
-- Transportation 15%
-- Utilities 10%
-- Food 10%
-- Clothing 5%
-- Medical 10%
-- Personal 5%
-- Other 5%
-- Savings 10%


Mike has been an Internet Guide/Writer in the field of Credit/Debt Management for over 10 years. His site was awarded Best Of Net by Forbes Publication from 2000 to 2005 with site visitation doubling to over 500,000 average views per month in the last year. He has also offered debt elimination seminars to businesses and community colleges for the last 9 years, and has written for several publications, and has been interviewed on the radio a number of times. Readers will probably be interested to know Mike also offers a free debt elimination mini-course via email. You can enroll at Debt Free In 7.5 Years. Visit his site at for more vital information on debt management.

© 2010 Mike Killian

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The views and opinions expressed in these articles do not necessarily reflect those of College Central Network, Inc. or its affiliates. Reference to any company, organization, product, or service does not constitute endorsement by College Central Network, Inc., its affiliates or associated companies. The information provided is not intended to replace the advice or guidance of your legal, financial, or medical professional.