Mission #13: Create A Personal Budget

One of the worst things you can do with money is not set a budget & plan for what you spend and how. If you don’t, you will inevitably overspend! And, you will not be able to accomplish your financial goals.

Let’s say you plan to buy shirts and notice they are 50% off for $20 each. Your first thought is to buy 5 for $100. But, you’re feeling $100 is too much to spend. You buy 2 instead for $40 and walk away feeling good about your decision. The following week you buy 2 more for $40, and 1 more for $20 the week after. In the end you’ve spend the full $100 yet your brain only registered it as $40, $40 and $10 on three separate occasions.


  1. Create a Budget for tracking your spending and monitor and pay down your debt (attached spreadsheet).
  2. For the Budget spreadsheet, start with 4 columns. Item description, budget amount, actual spent, and difference. Include rows for income, expenses, and savings as in the attached spreadsheet.
  3. Start by recording what you actually spend. Add rows for expenses not already listed. Note that on the attached spreadsheet, cells filled in grey contain formulas and should not be modified.
  4. At the end of the month, you will see the difference between your income and expenses.
  5. If you are satisfied with the difference, transfer your actual amounts from the Actual column to the budget column.
  6. If you are not satisfied with the difference, adjust your budget amounts to meet your goals. Or increase your income.
  7. How do you know if you are overspending on personal expenses (groceries, other food, clothing, toiletries, entertainment)? IRS collections guideline is approximately $500 per month. I believe it also depends on income and can go as high as 10% of your gross annual income divided by 12.
  8. For the Debt Spreadsheet, make 4 columns. Include Creditor/Debt, Starting Balance, Interest Rate (in decimals), Finance Charges, Payments To Date, and New Balance. Note that on the attached spreadsheet, cells filled in grey contain formulas and should not be modified.

For more about budgeting visit the following resources:
Wikipedia Personal Budget
eHow Make A Personal Budget
Financial Plan on About.com
CNN Money Budget Tool

This post relates to Life Strategies: Planning & Balance

Posted in Finances, Missions, Planning.