Developing a personal budget plan to manage your money is an effort that eventually becomes a habit that leads to financial freedom.

In moments like this when the economy is bad, developing a personal budget plan is a sure way to safeguard your own personal future. It’s amazing though that most people prefer to spend and save as the day come and go. They make little or no attempt of using spreadsheets, balance checkbooks or a well planned out formal budget to track their saving and spending habits. It will be to your own self interest if you make it an effort and then a habit to outline and track your daily or monthly expenses in comparison to your income. One great tool you can learn to use, so that this becomes a more pleasant and professional task to do is to make use of a spreadsheet. (If you are not comfortable using a spreadsheet software, then you can use a legal sized pad or just any other notebook that you will be comfortable with.)

Here is a simple task you can do to help you get started with your personal budget plan.

• Open a new spreadsheet and divide it into two columns.
• On one side (the left column) list all your income sources and includes the amount to the right side.
• On the other side (the right column) list all your regular bills on each line, then on the last line add at least 10% of income as unexpected expense.

For those of us who are more visual oriented, then feel free to download a free worksheet at http://www.vertex42.com/ExcelTemplates/home-budget-worksheet.html (Just copy and paste the url to your browser window)

N/B From your expense list above, you should exclude all your monthly credit card interest, auto loan interest and about 25% of any impulse purchase that you incur during the month The sum total from interests and impulse buying represents the amount you could have actually avoided paying each month. Let me point out that you should pay close attention to the figure you arrive at here. If the total makes up to 10% of your monthly expenses then you are paying a significant amount of money from your income to charges that could be avoiding. Now, a point to note here is that no one but you, being as realistic as possible, can decide whether that 10% overhead you pay is worth what you get in return - having certain items earlier than you would by saving for them. But, consider this: saving that 10% APR paid on $2,000 product for one year is equal to $110. And many people pay only the minimum monthly payment, which then obviously amounts to much more. That’s $110 you are paying solely to have something costing $2,000 a year earlier.

But here is the beauty of all these, it is only you who can decide which is worth more to you, but developing a personal budget plan will help you make those decisions rationally whenever a need arises. As I pointed early on, developing, planning and implementing a personal budget plan is more of an individual effort that eventually and naturally becomes a habit. If you don’t have one then I highly encourage you to start today, then sooner or later you will start to see where you money is going, you can seal a few loopholes and before you know, your financial freedom and security will be on track. So that when gas prices skyrocket or the economy is in a recession, you will feel safe and secure because you know where you money is.

By Joseph Nyamache

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