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Earlier this week I had a brief conversation with someone about budgets. This person told me that she thought a budget was the money left over after you paid all your normal bills. Unfortunately, she is probably not alone in thinking this way. If I may, I'd like to clarify what a budget is today.

A budget is an entire plan for a month's worth of spending. At least with personal finance it is. Businesses use budgets that perhaps have longer time frames, but they still encompass all of the planned spending within that time frame. One does not simply budget a fraction of one's income that is "left over" from all the other necessities. One makes a budget out of one's whole income.

You see, a budget is something that you use to also track those necessary expenses. Even though we may sometimes fall into believing certain expenses are non-negotiable, sometimes indeed they are!

As an example, perhaps you believe that your phone bill has to be $100+ a month in order to have all the features in a phone plan that you need. If you do some shopping around you may find that other, smaller carriers can offer very comparable plans at lower rates. Sometimes these rates may be significantly lower! To further illustrate, my family has 3 cell phones with unlimited talk and text with a little bit of data on one line. We pay roughly $55 per month for this plan.

Rent, food, utilities, gas, and even insurance premiums should all have a place in your budget. Not only these things, but the fun things too! Dinner out, vacations, drinks with friends, and ice cream with the family, are all things that can and should be planned out in your budget along with your necessities.

If you have been taking a fractional look at your budget, thinking it is the whole picture, today I challenge you to take a wider look at it. Take your budget in as a whole, not just part of your monthly spending. I trust you will find it enlightening!

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