The word finances has become a regular part of our vocabulary. We as a society and as individuals are learning the importance of finance and monetary strategy.

Money has become more and more valuable as we pay more attention to our finances. Organizing our finances can help improve our relationship with money and subsequently decrease the headaches that come with poor financial standing.

The best way to begin organizing your finances is by creating and keeping an effective budget. This will allow you to keep track of your money--how and where it currently goes, no matter the amount. This also helps you know how your finances are doing: whether they can be classified as health or unhealthy.

The hardest task of budgeting is determining how much to money to allocate to each category. You will have a good starting point for each budget category if you start tracking what you currently spend. This will also help you determine where your spending limits stand.

People seem to spend less when they track how much they spend and learn how quickly it can add up, creating a personal finance deficit.

You need to know everything that your money is doing and why it is doing it. This will help you to make more informed decisions about purchases. You will also need to become knowledgeable about how much you can actually afford to spend on things.

These percentages that follow will provide a good rule of thumb for what you should be spending as a percentage of your income on some of the major budget categories:

35% - Housing -- Spend no more than 35% of net income on housing. That includes mortgage or rent, utilities, insurance, taxes and home maintenance.

20% - Transportation -- Spend no more than 20% of net income on transportation. That includes car payments, auto insurance, tag or license, maintenance, gasoline and parking.

15% - Debt -- Spend no more than 15% of net income on all consumer debt: student loans, retail installments contracts, credit cards, personal loans, tax debts and medical debts.

10% - Savings -- Save at least 10% of income throughout your working life.

20% - Other -- Spend no more than 20% of net income on all other expenses: food, clothing, entertainment, child care, and medical expenses.

To help you get your finances more organized it is important to incorporate some useful tools that will make everything you do concerning your finances easier. These will help you overcome the normal challenges that face people when they try to keep a budget. Using personal financial management tools, such as Microsoft Money or Quicken, will make your budgeting more practical and simple, allowing you to integrate financial calculations into your everyday life.

Article written by Vic Bilson
Vic recommends Dynamic Financial Training that is all about helping others to help themselves and then turn around and help others. At DFT we believe that if we teach a person to get out of debt, they will stay out of debt for the rest of their lives AND so will the next generation of their family.