The Art of the Budget

Budgeting is like art. Both require discipline and perseverance, and both can yield a beautiful end product. The difference is that you don't need talent for good budgeting; you only need determination and a few simple tips.

No one likes going on a diet, but everyone loves the finished product. The same principle holds true when you use a budget for debt management. You may have to stop indulging in items that you can't afford, but ultimately, you won't be disappointed when your bank account gets fat with savings.

To create a budget, take a pen and paper and write down your monthly income and expenditures. Then follow these budgeting tips:

Remember the fun

Paring everything back to the bare necessities is the knee-jerk reaction when you start creating your budget, but it isn't practical or realistic. Life's too short to cut out all the fun. However, if you can pare back those "fun" funds to about 5 percent of your income, you'll be in good shape.

Minimum-only is a major problem

If you have credit card debt, pay more than just the minimum balance. Put some extra dollars toward the principal-otherwise your debt will never go away. You can also take out a debt consolidation loan and combine all your credit card balances into one tax-deductible loan.

Pay yourself first

Set up an automatic savings program where you put aside savings every month. Even a little bit of savings set aside regularly can result in a large chunk of change over time.

Don't let your rainy day funds dry up

It's easy to get into serious debt when your back is up against the wall. Create a rainy day fund, generally 3 to 5 months worth of income, just in case you run into a desperate situation. If you don't, you may find yourself forced into a bad credit mortgage or borrowing from relatives.

Budgeting is like dieting: You begin enthusiastically, but your willpower wanes over time. The key to sustaining a budget-like a diet-is to make it realistic. Include money for entertainment, and save a little bit every month. Once you've adjusted to your budgeted lifestyle, you'll feel good about saving more and spending less.