New Budgeting Concept

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What are the characteristics of a better budgeting method?

	It should be designed to let you divide and reserve your funds, and remain in control of them, without a lot of extra work.
	It should allow easy transfer of funds among expense items so you won't starve if you happen to run out of grocery money.
	And it should provide a single reconciliation point so that all family members can use one budget plan.

The Concept of an Overlay

An overlay allows you to see the way your funds are divided up and reserved—it gives organization to your finances without changing them or the way you handle them.

That is worth stating again—an overlay shows you how your money is divided up, but does not change the way you manage your checkbook.

An Example

To illustrate this idea, suppose you were given an aerial photograph of a town that you had never visited, and asked to pick out a few locations of interest: the park at the corner of Elm and Main, or the bank at High and Third. Pretty tough assignment, right?

Now, suppose you were handed an overlay printed on celluloid—that clear plastic material used for overhead projector transparencies and animation drawings. A map of the city, with all the streets clearly marked, would be printed on the celluloid. Placing the map on top of the photograph, you could pick out that park and bank with ease!

Notice that the photograph itself would not change at all, but your understanding of it would be significantly enhanced with the use of the overlay.

Better Budgeting: A Budget that is an Overlay of your Checkbook

This type of budget works hand-in-hand with your checking account to provide an overlay of your checkbook and thus your checking account balance.

Normally, when you look at the final line of your checkbook balance, you don't have much of a clue as to what that money needs to be used for. How much of it can you spend on groceries? How much do you need to reserve for all your utility bills? The overlay system will give you those details. You will always know where the money is, all without changing your checkbook, the way you pay bills, or the way you write checks.

Major Benefit: Focusing Attention Where Needed

Another idea central to this method is that it allows you to focus your attention where it is needed. This type of budget visually separates out the routine monthly bills, giving focus to areas in your budget that need attention.

An Example

A good analogy here might be to put you in sole charge of a daycare center responsible for 20 active four-year-olds. To add complication, suppose that one child had a special need that day-perhaps she had suddenly become ill and required lots of special attention. Stranded by yourself, this situation would be very difficult to deal with. But what if you could enlist some helpers? Suppose you could call in additional workers to watch the other children while you administered the special care. You could devote your attention where it was needed.

Additional Benefit: Understanding that Your Budget is JUST a Tool

It is a tool to make you become more efficient with your time AND money. What it is not, is a criticism or comment on how well you do with your money. To have a budget is a good thing—successful people and companies all have them.

Next: The Next Steps: Actually Starting