The Texas Society of CPAs has some tips for clients on how to keep a lid on budgets and expenses.

Budgeting is a “B” word for many people, creating unpleasant thoughts of self-denial and endless record keeping. However, it does not have to be a thankless chore.

A budget is a basic savings and spending plan that helps with reaching financial goals.

The Texas Society of CPAs wants to help make budgeting as simple as possible by suggesting the following:

Creating a budget
Whether using the automated route or the pencil and paper approach, the act of creating a budget is basically the same. Start by listing all sources of monthly income, including wages and salary, bonuses and commissions, interest, dividends, and rental income. Next, identify major expense categories.

Consider fixed monthly expenses such as mortgage or rent, insurance premiums, child care, and utilities, as well as more flexible and intermittent expenses like food, clothing, dental bills, gifts, and car repairs. Then, grab pay stubs, checkbook register, and credit card statements and begin to allocate expenses to the different categories.

Accounting for the cash
Many budget builders find that their records reflect only a portion of the spending and, for some; it's a relatively small portion. What happens is that all those cash outlays for gourmet coffee, video rentals, and magazines seem to fall between the cracks.

If a large chunk of income can’t be accounted for, try carrying around a notebook for a few months and record every dollar spent. Another easy way is to collect receipts. While spending $5 a day on incidentals may seem trivial, the $1,825 at the end of a year certainly is not.

Saving more by cutting expenses
Look for expenses that can be cut back so more money will be available for investing, vacations, children's college fund, and other important purposes. A key strategy for meeting financial goals is to get in the habit of paying yourself first. Rather than paying all the bills and allocating what is left over, if anything, to savings, determine an amount to save each month and set it aside before the other bills are paid.

Follow up
Once the budget is set, it is important to monitor it on a regular basis. At least once a month, or more frequently, record and categorize the current month's income and expenses. Then take a look at the results.

When comparing income and expenses, if spending is outpacing income, it may be time rework the numbers. Try to squeeze a little out of several categories rather than taking a bigger chunk out of one.

Why budget?
You may be thinking that a budget isn’t necessary. After all, spending isn’t out of line, and you know exactly how much is needed to pay the bills. Well, a budget also can be helpful when those unplanned “lifestyle choices” happen.

Whether a conscious choice has been made to switch from a dual-income to single-income household or you have suffered a sudden job loss, there are actions to take to minimize the financial impact.

Value of short-term savings
Everyone should have some easily accessible short-term savings stashed away. Having an emergency fund means that when the unexpected happens — whether it’s a job loss or an unanticipated home repair — the resources will be there to meet day-to-day living expenses.

How much is needed?
While CPAs recommend to aside enough money to cover three to six months of living expenses, individual circumstances may dictate to have more or less. Keep in mind that this recommendation doesn’t equate to three to six months of current salary, just set aside enough to cover basic monthly expenses.

Building an emergency fund requires discipline. It may require reducing spending to free up extra cash. Treat savings as if it’s a bill. If $12,000 is needed, set an affordable amount to be put away each month, without fail, until the savings goal is met.

Consult a CPA
If there are questions about budgeting, interest rates, debt management or any other issues related to finances, remember that local CPAs can help. Turn to him or her with all financial concerns.

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