Budgeting for Dummies: Still Smart

Budgeting for dummies may be the answer if, after reviewing the approach offered on Home Money Management , you decide that money management is still too complicated. Also called the 60% budget, this plan is a simplified budget than anyone and their grandma can understand and implement. The important thing is that you find something that works for you and then just do it.

I don't mean to say that budgeting for dummies is just for dummies or grandmas. On the contrary. It is still a powerful way to look at how you can maximize the performance of your money.

The first thing you will do is to lump all of your living expenses, including charitable donations, into the first 60%. This sounds kind of familiar, I know. But as far as divisions go, there is no reason to have to track the amount of money you spend on, say, your individual utilities, for example.

The next 10% is your retirement/investment fund. Don't ever withdraw money from this. You will kill your goose, and then you will have no golden eggs. Not smart money management.

The next 10% is for long-term savings. If you limit the liquidity of these funds, you will make it harder to spend this money. Securities or even certificates of deposit are a good place to store this chunk of your income. Still, you could cash in if an emergency arises.

Short-term savings takes up the next 10% to be used for irregular expenses. Stored in a traditional savings account, plan to use all of this money for insurance deductibles, car and home repairs, and vacations.

The last 10% is for entertainment. Life is all about balance. Have fun. Enjoy your family and make some memories that will make creating a financial legacy worth carrying on.

Now if you can't fit your expenses into the first 60%, it may be time to take a hard look at your priorities. You can always simplify your lifestyle if you approach your spending habits with a good dose of honesty.

Richard Jenkins, who writes for MSN money characterizes the spirit of budgeting for dummies when he says, "The real secret to building a budget that really works isn't tracking what you spend, any more than counting calories is the secret to losing weight. The key is creating a sustainable structure for your finances, one that balances spending and income and that leaves enough room to handle the unexpected."

A simpler way to save, budgeting for dummies can help get you out of a rut in a hurry.

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