To many people budget is a bad word. But if you learn how to start a budget and see how it can work it will make managing your money easier.

I spoke to a group of college students today on budgeting, spending and other topics. One example I mentioned is from Dave Ramsey. If you consider the average income is $40,000. After 10 years of working you will have earned $400,000. If you were to build a $400,000 house would you start building without a blueprint or plan? Budgeting is the same thing, you can plan how to spend and save your money. With a budget you tell your money what to do instead of your money telling you what you can do.

I realize it is difficult for college students to afford certain things. But if you take a look at your spending, small changes may be able to give you more to spend in other areas.

Nancy Kvamme

Many people think I disapprove of spending money on anything. I like to relate budgeting and spending to dieting. Just as with dieting you need to consider your calorie intake and amount of exercise you get. With budgeting you need to consider your income and the fixed expenses you have. Once you deduct your fixed expenses such as mortgage/rent, utilities, food and debt repayment then you can see how much you have to spend on other things.

As it is discussed in David Bach’s books, “Smart Women Finish Rich” and “Smart Couples Finish Rich” and other resources it is helpful to sit down and think about what is important to you about money. Once you decide what you value, it may be easier to budget your money towards those things.

I feel it is also important to track your expenses so you can see how you are spending your money. It is easy to take out cash and all of a sudden your wallet is empty and you may have little idea of what you actually spent your money on.

So it is alright to spend money, just think about what you are spending it on.

Nancy Kvamme