You do not need to be rich to achieve financial freedom. Financial freedom is simply living debt free and organizing your money so that when the bills are due, you have the money set aside to pay them.

About two years ago I realize that each and every month I was going a little further into debt. I decided it was about time to do something about it, so I went to a financial seminar sponsored by my local church. This seminar was pretty much what I expected, they reviewed basic principles for handling money properly, avoiding credit cards, being careful when purchasing a vehicle, and living on a budget.

The approach that was used when discussing the budget topic is what changed my financial life forever. The word "budget" has such a negative connotation for most people that it is an instant turnoff.

Most people believe that a budget is for people who don't have much money, and it also tends to make people feel restricted in their spending. Nothing could be further from the truth!

A budget is simply a spending plan. Most people like to spend money, so let's use the word "spending plan" and leave the word "budget" behind us.

A properly used spending plan will provide a person or family (with even a modest income) a true sense of financial freedom. I am experiencing an awesome sense of freedom myself since I have put my own spending plan into place about two years ago.

What I am talking about is this sense of freedom that you get when the mortgage comes due and you have the money already set aside; when the kids have to go back to school shopping and the money is there waiting; when you go grocery shopping each week and you know exactly how much money you can afford to spend because the money is already set aside!

When we took one of our cars in for inspection, we were told that it needed new tires. No problem! I had an automobile maintenance fund set aside and we had just enough money to cover not only the inspection, but a nice new set of high-quality tires, all because we implemented a spending plan with the help of some very powerful, yet easy to use software!

I cannot tell you what a wonderful feeling it is to have money set aside for just about anything and everything that comes up!

An effective spending plan can be created by simply looking at the money you have spent over the past year or so and getting an estimate as to how much money you spend in each area of your life. Then looking at your income and getting an idea of how much money you would need to put aside for each category for the coming year. If you have not been keeping track of where your money goes, simply start now by keeping a general record of where you spend your money.

This article will not go into too much detail about how to do this, but I will give you an overview.

Sit down with your checkbook and make a list of all things you spend money on. Then create 10-15 categories that all those expenses would fit into.

An example would be:

Housing (mortgage, utilities, repairs, insurance, furnishings, etc.)

Automobile (payments, gasoline, maintenance, insurance, etc.)

Food (weekly groceries)

Entertainment (dining out, movies, golf outings, etc.)

Savings (investments, savings accounts, college fund, etc.)

Vacation (ALL vacation expenses including travel, dog sitter, etc.)

Debt (credit cards, loans)

Miscellaneous (pretty much anything that does not fall directly under any other category)

Charitable donations (tithing, other tax-deductible donations)

Christmas (nothing is more awesome than not having to worry about how you're going to pay for all those gifts!)

Once you have listed all your expected expenses into one of the categories, you'll have to figure out how much money from each paycheck you need to put toward each category. For each category you'll have an envelope.

Right about now you are probably thinking, "Is this guy nuts? Nobody uses cash anymore, and nobody keeps cash in envelopes!" This is where software comes into play. There are software programs available that will enable you to have "virtual" envelopes to keep track of your money, which is safely tucked away in your checking and savings accounts. I am not talking about a simple Excel spreadsheet or anything of that sort, I'm talking about extremely powerful software (much better than MS Money or Quicken) that can generate reports, track all of your expenses,pay your bills online in seconds, make tax time a breeze, automatically place the proper amount of money in each envelope, and get you on the highway to financial freedom.

It is probably best start out with a relatively small number of categories. As you become familiar with your spending plan you can expand the number of categories. For example you may want your housing category to include all the monthly bills associated with your home, or you may want to have a separate category for mortgage payments, utilities, homeowners insurance, taxes, etc. You may want to add more categories such as taxes, birthday parties, medical bills, hobbies, allowances, unexpected expenses, etc..

It may take a little bit of time to set up your spending plan, but once it is set up, it takes very little effort to keep it in place. You won't do it perfectly the first time, you will have to make adjustments as time goes on because unless you are extremely lucky, you'll find out you had too much money set aside in some categories and too little in others. You can always change your spending plan as your situation changes, your income changes, or your spending categories change.

This may sound like a lot of work, but the concept is simple, and the software will guide you through step by step. Very soon, you will have total control of your money, and will know what true financial freedom feels like!