The third step is to turn your priorities and awareness into a plan or a "Budget". The biggest advantage of a budget is that it will give you control of your money. It let’s you decide what you are going to spend your money on. Your budget will definitely be affected by the commitments that you have already made, like your house or car payment, but it will let you apply what ever is left the way you and your family have decided.

You are now armed with the information you collected while discovering your financial priorities and the awareness of what you are currently spending by documenting what you spend. You are now in a position to make a plan that you will be able to stick to and that will get you closer to the financial future that you desire for you and your family. The active application of this information will result in a freedom that your may not have know for a while. This freedom is a direct result of your efforts to take responsibility for creating and following this plan. This freedom is in direct contrast to going through life always wanting (coveting), bouncing checks, never knowing where your next tank of gas is going to come from or your next bag of groceries and then putting the lunch you can’t afford on one of your many credit cards.

Your plan will need to include both income and expenses. A budget for a specific period of time (such as weekly, biweekly, monthly) according to your pay schedule seems to make the most sense, however that doesn’t mean that you can’t take into account expenses that don’t occur according to that schedule, like auto insurance or property taxes. My wife and I will take expenses like that and divide them up into a monthly amount and set that amount aside each month. Then when the payment is due there is money in the bank to cover it. It is best to physically set these funds aside in a savings account or a separate checking account so that you don’t "accidentally" spend them.

There are some basics about the plan that should have been taken into account in the priority activities but I feel that we should touch on again. Your budget should include charitable donations and savings. A good rule of thumb is 10% of your gross income for each of those items. This basically consists of serving others and then serving or paying yourself. If you are not able to pay 10% into each of those areas budget something for it, even $5.00.

You can create a simple form to help out. The table below will hopefully give you some ideas to create your form.

Your budget categories should reflect the financial priorities that we talked about creating in the last article.

Some books that can help you come up with your plan:

• Rich on any Income
• 10 Minute Guide to Household Budgeting
• The Family Budget Workbook/Gaining Control of Your Personal Finances
• Family Budgets That Work