A Budget That Works

Anyone will tell you that when you want to get your money under control, you have to start with a budget. Just the idea of having a personal budget is enough to make you groan, and I didn't like it either. No matter how I tried, I couldn't get my money under control with a budget.

At the time I was a department manager, and I had a budget for my department. The really odd thing is that I had no difficulties at all with running my work budget, but when it came to my personal budget, it just wasn't working for me.

I thought that if I could run one properly, I should easily be able to run them both properly, so I looked into why I was getting such different results with the two budgets. Well it turned out thjat the word 'budget' was about the only thing that the two of them had in common.

My work budget consisted of my department's income and my department's expenses. The expenses covered stuff like employee salaries, marketing and promotion, printing, and the usual office expenses.All the expenses were dealt with by the Accounts Department.I just needed to concern myself with the income. The budget income figures weren't fixed, they were targets for the amount of income my department should produce.

My personal budget consisted of my personal income and expenses. The expenses covered stuff like accommodation, food, electricity, gas, petrol and the usual sort of personal expenses. These expenses were not fixed, and were dealt with by me rather than the Accounts Department. The income was fixed, and was dealt with by the Accounts Department.

So on the one hand, I had a budget with fixed expenses dealt with by Accounts, while on the other hand I had a budget with a fixed income, again dealt with by Accounts. The variable parts of my two budgets were dealt with by me - for my work that meant generating sufficient revenue to meet or beat the budget figure, and for my personal budget that meant spending variable amounts.

So I could see that I was good at making money for the company, and I was also good at spending my own money.

Since I was good at aiming for a target revenue figure, I decided to apply the same principle to my personal expenses.

Instead of trying to increase my income though, I decided to aim at having a predetermined surplus left over each month after my expenses. And this turned out to be the crucial point in getting my spending under control. I didn't call it a budget anymore - now my budget was the surplus that I was aiming to have at the end of the month. Everything else was a Spending Plan. Every time I went outside my Spending Plan, I was reducing my surplus, and could then fail to achieve my budget surplus figure.

If you are amongst the many people who can't manage a standard personal budget, you might well find this change in emphasis useful to you as well.

Try it, and see.