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It’s kind of like I was a hiker lost in thick woods. Rather than slumping down against a
tree and giving up hope because I was afraid, I hiked up to the highest point to find out

how lost I was and where I needed to go to get back to the trail.

Your budget acts as a way to see where you’ve been, where you’re going and what you need
to do to get there.

Budgets Make You Plan Ahead

A budget by itself, as a piece of paper or document, isn’t worth much.

The simple fact that it exists won’t change your habits. You have to stick with it, and in

order to do that, you’ve got to have a specific, time-oriented goal.

For example, my wife and I had a goal of paying off our credit card debt. We created a
budget to do that, a budget that included spending limits on gas, groceries, eating out and

miscellaneous spending.

However, for the first two years of our marriage, we’d only managed to pay off about half
of our debt. Considering that we had about $1,000 leftover at the end of each month, we

should’ve done better. I was frustrated: $11,000 is less than $22,000, but it’s still a ton of
money.

So, I created a nine-month plan with specific steps to get us to $0 credit card debt by a

certain date. Guess what happened? We executed the plan flawlessly and were able to pay
off our debt one month early.

How to Make a Budget

The first step in creating a budget is to identify all the spending categories in your life.

Some basics are:

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