Your Money: The Missing Manual

Chapter 3. “Budget” Is Not a Four-Letter Word

"A budget is telling your money where to go instead of wondering where it went.”

—John C. Maxwell

As you learned in the last chapter, your financial goals are your destinations. But to get from here to there, you need a map to show the way. In other words, you need a budget.

To most people, budgeting sounds about as much fun as a trip to the dentist. But creating and sticking to a budget doesn’t have to be a giant chore, and it can have huge benefits. You probably think of a budget as a restrictive, tedious accounting of every penny you earn or spend. Turns out budgets don’t need to be super detailed to be helpful.

For a lot of people, a broad, general budget gives them the guidance they need to reach their financial goals without making them feel like they’re in a straightjacket. But some people prefer a detailed budget with lots of categories. If you pick a budget that fits the way you live, it can help you meet your goals more quickly than you ever imagined.

This chapter will give you some basic budget frameworks that lots of people have road-tested and found helpful. You can use them as is, or build on them to create a more detailed budget. You’ll also learn why many budgets fail, and find out how to avoid common pitfalls. Finally, you’ll get a rundown of some of the best computer programs for tracking your budget.

Mapping Your Financial Future

You may have the wrong idea about budgets—lots of folks do. Budgets aren’t meant to control you, ...