What should a good budget include, and what are the limitations of budgeting?

A personal budget (also known as a spending plan) is a plan for spending and saving money that allocates future income toward expenses, savings, and debt repayment. Past spending patterns, personal debt (i.e., outstanding balances that commit part of future income to repay), and future financial goals are considered when creating a personal budget.

A limitation of a budget is that it will only work if it is adhered to by all members of the family or household. If someone spends more than his or her budget specifies, the financial situation will get worse.

Contact the Cooperative Extension office in your county or state for budgeting information. Some counties offer community budgeting workshops which can be helpful in learning new budgeting strategies. Some states have developed extension Web-based tools.

For example, Rutgers Cooperative Extension has online resources to assist with budget preparation. To download a worksheet that can be completed with a pencil and a hand-held calculator, visit http://njaes.rutgers.edu/money/pdfs/fs421worksheet.pdf.

To download a spending plan spreadsheet that uses pre-programmed Microsoft Excel® software to make income and expense calculations with a computer, visit Spending Plan Template.

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