Financial crisis: Back to the basics of personal budgeting

MADISON, Wis. (10/15/08)--As stock market swings rattle nerves and grocery prices pinch pocketbooks, more people are realizing the importance of going back to the basics: they're developing a budget.

Stressed-out consumers who bought too much too fast during "good times" are now being forced to tighten their belts and manage their money (Reuters.com Oct. 9).

"Given what's happening lately, budgeting soon may be in vogue," says Susan Tiffany, Credit Union National Association's (CUNA) director of personal financial information for adults, Madison, Wis. She says respondents to the 2008 Financial Fitness Challenge on CUNA's Home & Family Finance Resource Center are showing high interest in trimming expenses for food and energy—whether to run cars, furnaces, or refrigerators. "They're sharing ways to save money systematically instead of erratically."

The steps to develop a budget—or blueprint for your day-to-day personal finances—include listing all your income and expenses, figuring out where your money goes, balancing income and expenses, and then managing whatever system you choose—checkbook ledger, receipt method, envelope method, account book, or computer program.

A successful spending plan helps you:

Stay on track financially;
Decide where your money goes;
Make informed choices;
Determine whether you're living within your means;
Develop a savings plan; and
Control your financial future.

Tiffany recommends that beginners allow for flexibility. "Make adjustments as you go along, and let all family members participate in the discussion about what to keep and what to cut out. Be ready to compromise and negotiate because, in the end, it's all about reducing stress and getting back to what's most important."

For more information, read, "Half of Workers on Paycheck to Paycheck Treadmill," in Home & Family Resource Center.

courtesy of cuna.org