Our Fiscal Directive Report for the next 12 months is imminent. In short, the new Budget for the Country will be announced in Parliament. Speculations about draconian efficiency measures accompanied by simultaneous defences that running up expensive loans is for good capital investments are running rampant.Will it be a balanced Budget that is, will necessary expenses be matched by income brought in? Will it have significant increases in taxing mechanisms to counter less than expected revenues? Will it contain explicit cost-cutting measures and stricter accountability for the people's money? Will the people be asked to shoulder more debt?We shall see.A budget, no matter how elaborately compiled with expensive consultants' input, or how composed by taking prior year actual revenues and expenses and multiplying by an inflation rate of five per cent, is still an intangible document written on paper. A budget, then, in Government's case, is a set of numbers recorded for posterity that represent someone's (or a group of someone's) estimate of what the governmental family's annual expenses, revenues, shortfalls or surplus will be.A budget can only pretend (since it projects the future) to represent anyone's financial reality. More often than not, the two are not synchronised.Preparing a budget is very hard work. In your household, if you have the energy to put a budget together, the exercise typically will rely upon your historical data. You will review last year's real costs in pure cash outlay. Income actually received represents salaries, rent (however reduced in this environment), part-time jobs, interest, and dividends on accounts, and gains on investments. It can become an emotional chore, in hindsight, to actually contemplate your spendthrift ways. On the positive side, readers have told me that they feel extraordinarily satisfied when they finally decide to control their monthly spending.Sticking to a budget is ever harder. Well, you've got the whole budgeting thing up and running. You know what you have to do to make it work. Everything goes very well, for a while. You are a perfect model of decorum and restraint. Then, you've had a bad day and you walk by that simply perfect little bag it is expensive but … You reach for your credit card; you can pay it off later. Oh, oh.Need versus want. The easiest way to start a budget process is divide your spending into two camps: Need and want. Need to save, by the way, is a primary need. People are often very, very surprised to discover that what they need is significantly less costly than what they want. Times are very tough right now. Tough times call for tough discipline. Do your very best to cover your needs and save the rest. When you feel financially secure, and only you know what that means, then and only then, allow yourself a small ‘want' purchase.Making up the shortfall. Working on a personal budget during uncertain times is extremely useful for anticipating shortfalls in income. Unfortunately, proactive planning in some cases will mean severe trimming of every cost. It won't be necessary to question want versus need.Every purchase will become a question of do we need that at all? Every chance for additional income, possibly dismissed in the past, needs to be taken on. Any extra income generated will give you an additional cushion. If you think that your family may be in that situation, take action now.Good budgeting means good money management. Since a budget is only a projected guideline of future expectations, a budget will only be as helpful as your commitment to the process.A budget is on paper; cash spent goes out the door. They are not the same.Personally, I prefer cash. If you don't have the cash, your budget stays intact. If you do have the cash and spend it, your budget gets blown out the window with the first hurricane of the season. No point at all in running a budget if your purchases are all financed on credit cards.I also like to compare the cost of a budget in Bermuda and US dollars terms. A budget devoted exclusively to BMD dollars needs to take into consideration the cost and availability of US dollars, or other foreign currency.Which has the most value? US dollars or Bermuda dollars? This statement can be dismissed as so obvious it isn't worth pursuing. Right you are.The commodity of money. Bermuda has a disproportionate reliance on US dollars. We need them. The United State does not need or want our Monopoly money. If I am a US person who travels to Europe, I will convert to euros. While the value of my US dollars in comparison to a euro may be different, the power to buy with the money in hand in the marketplace is the same.Why? Both currencies have equal acceptance by a vendor when it comes to purchasing power because both the United States and the European Union have natural resources, central banks, federal reserves, and hard assets to back the currency value. Have you every attempted to purchase something abroad by using Bermuda dollar currency?Why not use just Bermuda dollars. Who needs US dollars anyway?We could do that if we closed our borders completely to a very bare survival life, but we need those foreign dollars to purchase in the global marketplace, and we owe foreign dollar interest on our debt borrowings.We, the people of Bermuda, have become the credit card merchants for our Government. The difference between us and the commercial credit card operators such as banks, and finance companies are three:l We aren't receiving those princely interest payments every month.l We can't ask our own government to pay overdraft fees.l We cannot shut the credit cards down when the balance is unpaid.And there is one more thing. We have no say in how the Government money is spent, even though we keep our own credit card accounts under control.The Government is the steward of our money. Government budgets are based almost entirely on the ability of individuals and business entities to pay assessments, fees, taxes, and use revenues. It is in our best interests to carefully monitor government performance in managing our money by holding accountable each of our Parliamentary representatives. We have to manage our households; government needs to manage our finances for the future of us all. We expect them to be managed well.Sources: there are thousands of good budgeting websites out there They are only good if you use them. Do it now.Stay tuned for a reader's “home style budgeting philosophy”, foreign currency discourse, pension updates.Martha Myron, JP CPA CFP TEP, is an international Certified Financial Planner™ practitioner in a multi-family office for private wealth management. She specialises in independent fee-only cross border investment, tax, estate, and strategic retirement planning services for Bermuda residents with cross-border and multi-national connections, and US citizens living abroad. She is a Masters in Law candidate in International Tax and Financial Planning. For more information, contact martha.myron[AT]gmail.com or 296 3528 at Patterson Partners Ltd.