Dear Ms. Plaid:

It’s January and this year I have promised myself I will work on my personal finances.  I want to start a budget, but get overwhelmed with the process and all the information.  Can you give me direction on getting started?

-Budgetless

Dear Budgetless:

Getting started on a budget can be a bit overwhelming at first, but there are lots of tools to take the heavy lifting out of it.  Before you jump into the numbers, spend some time thinking about your financial goals.  What is it that you want to achieve with your money?

You will also need to understand your net worth position.  What are all your assets minus your liabilities? Below is a simple chart that you can build to sort it out.

Ask Ms. Plaid: How do I Restart a Budget?

Total Assets $199,500 less Total Liabilities $193,500 equals $6,000 net worth.  This is great because it is positive, but you do have a great deal of debt.  The fastest way to building wealth will first be tackling debt that frees up your cash to invest and do things you enjoy.

The next step is to make a list of all your monthly income and expenses.  Don’t just guess go get your credit card statement or your bank statement and figure out what you spent on each category.

Ask Ms. Plaid: How do I Restart a Budget?

Net loss is not good at all and keeps you in the recurring cycle of debt.  Look back at your objectives, what do you really want to accomplish?  How can you reduce spending in areas to pay down debt and take control?

Now that you have the basics of your current picture and a commitment to take control you might consider a few tools to keep this easy to track on a monthly basis.

My two favorite applications are below:

Mint This is my personal favorite its free and easy.  It let’s me link up all my accounts and I can even do a budget in the desktop application.  It has a great app and is easy to use.

EveryDollar  – This app was built by the Dave Ramsey team that is great for budgeting.  I like that this budgeting process allows for flexible income planning versus anticipating the same income every month.  The basic version is free and the Pro version is $100 per year which lets you link up your accounts.

Both these tools take a bit of time to link up all your accounts, but knowing where your money is going is the first step.  You can always use pen and paper and write everything down, but this is an easy and convenient way to get started.

Budgetless – good luck and I hope to hear from you in a few months to hear about your budgeting success.  Financial freedom is a critical component to a woman’s success and you are taking that first step.

-Ms. Plaid