Budget Planning

Glyn Simpson at http://money.mvps.org commented on the importance of looking at your cash flow as well as your budget. By using programs such as Microsoft Money or Quicken you will be able to track your cash flow. The reason why I have not focused on cash flow is that I budget on a payroll to payroll level. By doing it this way I always plan on having a positive cash flow. However it is important to plan for times when you current expenses exceed your current income. If your expenses exceed your current income and it is not due to unplanned expenses ( hospital bill, auto repair, etc.), you are not living within your means and you need to rethink how you spend your money. If unplanned expenses are causing your cash flow deficit you have two main ways of dealing with that. The most preferable way is to use your emergency savings to pay for unplanned expense. The other way is to use your credit card responsibly to pay for these expenses. This means before using you credit card you should budget for how you are going to pay off this expense within a few months.