• Creating a budget plan helps you have money available when it's needed.budget, payment allocation image by Kalani from Fotolia.com
  
  Creating a household budget may sound tedious or daunting, but it's one of the best ways to take charge of your household spending. In fact, some people prefer to call a budget a spending plan instead, because, as Dave Ramsey says, "a budget is just spending your money with intention." By creating a budget plan, you're directing your money where you want it to go instead of asking where it all went.
  
  

Create Goals

• Creating budget goals is an important step in budget planning, because without knowing what the purpose of your budget is, it will be difficult to stick to. A budget goal can be as simple as making sure you have enough money for groceries each month, finding a way to afford a new car, or saving for your child's college expenses. Goals can be short term: one month or one year; medium term: three to five years; or long term: 10 years or more. Once you know the current budget goal, you'll be able to plan spending categories and amounts in a controlled, decisive way that will help you reach those goals within the time frame you've chosen.
  
  

Expenses Equal Income

• The primary purpose of a budget is to make sure you're not spending more money than you're bringing in. When you total all sources of income and total all sources of outgo, they should be equal. If you have more income than outgo, then budget the extra toward a savings goal, emergency fund or paying down debt. If you have more money going out than coming in, you'll need to cut expenses immediately.
  
  

Plan by Schedule

• When creating a budget plan, it's easiest to plan spending on the same schedule as your income. If you're paid weekly for example, plan to portion out your paycheck into even increments that will add up to the monthly bills you have. A mortgage payment of $1000 per month is less stressful to pay when you set aside $250 from each week's paycheck, for example.
  
  

Take Tiny Bites

• Some bills and expenses come up just once or twice each year, and if they're not planned and budgeted for they can wreak havoc on your household cash flow. If your automobile insurance is due once each year, for example, it's much easier to budget for a small amount each month than it is to come up with the entire amount at the last minute. A $600 per year auto insurance policy is just $50 each month. The same approach works for holidays, birthdays and anniversaries. If you know you want to spend $1000 on Christmas gifts this year, break that down into easier monthly payments of $83.33 instead and be sure to allocate that money in the budget each month, even though you are not actually spending it. That way when it's time to pay the car insurance or go Christmas shopping, all the money is ready and waiting in your bank account.
  
  

Savings and Emergency

• Plan savings and emergency funds into your regular budget. By putting your savings budget right alongside regular bills, you're more likely to pay yourself first regularly. Likewise, if you regularly budget a small amount of money toward emergencies, it won't phase you when you need to replace a flat tire or fix the water heater. If you don't add savings and emergency funds to your budget, you're more likely to allocate and spend everything you make in other budget categories, and find yourself in a pinch when something unexpected comes up.
  
  

Track Spending

• Once you have your budget set up, it's important to track your spending and review the status of everything frequently. According to Dave Ramsey, the first three to four months are the hardest and may require adjustments as you go along. By tracking every penny spent, you can easily see where you're overspending or underbudgeted and make adjustments each pay or budget period.