Creating a budget that works

Posted by Becky Gulden

CHARLOTTE, NC (WBTV) - Today's day 9 of our 20 days, 20 ways to survive the economy and today we're talking about budgets.

You probably won't find a financial expert in the world who doesn't endorse a budget,  especially now.

Yet many of us go day to day without one.  Often because we prefer to keep ourselves in the dark about our own financial situation.

Others may try budgets but often times they fall apart... mainly because people aren't doing them the right way.

Financial Professional John Putnam walked us through the eye-opening process of creating a budget tha work.

Start with writing everything down.  Write down what you take home every month.  Then write down all your expenses.  Make sure to include car loans, mortgage payments, prescription costs, gas for work, food and eating out.

Most of those are easy.  It isn't too hard to figure out what you pay each month in expenses like cable, electric, water and etc.

But then comes the other questions.  Some of these may feel more like confessions.  Write down how much you pay each month in credit card bills and your balances.

Looking at how much money you spend on things like coffee, eating out, entertainment is very eye opening.  It can make you keep a tighter grip on your purse strings.

Once you write down everything you spend and how much you make.   You'll want to put your expenses in three categories.

First, your fixed expenses.  These are the things you are contractually bound to pay every single month.  Things like rent, credit card payments, and car loans.

The next category, living expenses.  These are fixed for the most part but you have control over how deeply you spend in these accounts.  For instance groceries, household items, and your electric bill.

The third category, is the discretionary category.  This includes movies, eating out, and coffee runs.

For more on this budget check out the story that aired on WBTV News This Morning.