A budget is your plan for how you intend to spend the money that you bust your butt to earn. No plan means you're flying by the seat of your pants.
I live on a budget. I'm a big, ol' TV star and I live on a budget. That's the only way I can make sure my money is doing what I want it to do. If I take my eye off the ball, I know the money is going to go places that do me less good. So every month I make sure my needs are covered, set aside a little something for the things I love to do and I make sure I stay on track.
Once upon a time, before credit was as common as the cold, people knew whether or not they were living within their means because they either had money left over at the end of the month or they didn't. With credit cards, lines of credit, and overdraft protection, it is much harder to see that you're not making ends meet because you can fool yourself into thinking you've got it covered.
But if you have a budget, you will know the truth.
The point of a budget is to set money aside for specific purposes -- to cover your needs such as shelter, food, transportation, debt repayment and savings. But it's not just about needs; your budget also helps you plan for your wants like the gifts you will give throughout the year or that stash of cash for the vacation you've been dreaming of.
It's a lot harder to spend willy-nilly when you're on a budget because you've accounted for where the money is going, down to the last red cent. All my budgets come out to zero at the bottom. If I find a category doesn't work because there's not enough in it, then I have to cut from another category to make the budget balanced. But every cent is accounted for. No surprises.
Not everyone is prepared to be a grown up and spend money consciously. Some people like the rush of spending on a whim. They hate budgets. But they're the people most in need of a budget because they have no self-control.
If you're serious about taking control of your money and your life, you need to make a budget. All the instructions are on my website, along with the interactive budget that will pour the money into the magic jars if you've a mind to use them.
If you've convinced yourself that budgets don't work, I'm here to tell you it's because you've never made one the right way. But I'll have more about that in a future column.
Gail Vaz-Oxlade's latest book, Money Rules, is published by HarperCollins and will make you say, "Really? I didn't know that!" Visit her website at www.gailvazoxlade.com