Let's start by defining a "Budget Analysis". This is simplya breakdown of your budget (income, bills & expenses) showing how much money you have coming in and how much you have going out. It will show how your budget category percentages comparewith what is recoginized as the ideal percentages. The most important aspect of the Budget Analysis is the recomendations for improvement.
The first part of your analysis will list your income and breakdown your bills and expenses by category. At Budget Stretcher I use only four categories, Housing, Other Bills, Household Expenses, and Savings. The three expense categories allow 30% of your take home for each category with 10% going tosavings.
Next, your expenses percentages will be compared to the idealpercentages that will show you what areas of your budgetneed improvement. The percentages above are simply targets. If you exceed the recommended percentage in one category but youdo not exceed 100% of your take home pay for all categories, then you would not normally have a problem.
The recommendations for improvement are based on sound financialpractices. There isn't anything complicated about this, it ispretty much 2+2=4. However, there are some tricks that can berecommended to help make the figures add up a little easier. Asan example, if you have say 40% of your income going to the Other Bills category because of credit cards, it may be recommended that you try consolidating your credit cards to lower your payments. This can be done by either a consolidation loan, home equity loan or by using an existing credit card to pay off all of the others.
I would recommend a Budget Analysis for anyone that is havingproblems with paying their bills or anyone that consistantly pays their bills late. Also, if you have problems organizing your bills or would like to reduce your debt, a budget analysis may be helpful.
The next step is follow-up. No matter how thorough your budgetanalysis, you are going to have questions along the way. It isimportant that whoever is doing your budget analysis areavailable to answer these questions for as long as you need the help.
A Budget Analysis is not the answer to all of your problems. It is going to take time, organization and discipline to get your finances in order but it can point you in the right direction.
How Did I Get In This Mess?
When I was younger and having all kinds of money problems, I askmyself a thousand time how I got myself in this mess. It seemed like one day we were doing fine financially and the next we owedeverybody. How can it happen so quick?
Where Does Your Money Go? Taxes
Trying to stay within the theme of Budget Stretcher, I thought a series of articles on knowing where your money is going may help some of you understand just how much you pay on certain expenses.
Preparing For The Worst
I would say that most of us have experienced money problems at some point in our lives. This could have been caused by the lossof a job, injury or illness, over spending, and the list goes onand on.
