Ask the average person what's easier - putting together a household budget, or sticking to it - and the response you'll get will most likely be a shrug of the shoulders.  Putting together a household budget takes time, and sticking to your budget takes discipline. 

What if you don't have the time or desire to review your actual inflows and outflows each month?  Luckily for you, there's a shortcut available known as "backing into the budget".

Also known as "paying yourself first", certified financial planner Susan Schwartz tells her clients to skim off the cream and live off the milk. 

To back into your budget, start by subtracting your estimated monthly outflows from your net salary and other inflows.  Next, sign up with a bank or mutual fund company to have that amount of money automatically transferred out of your checking account into a savings or money market account each month. 

For example, if you bring home $7,500 per month, and estimate that you need $6,000 to pay all of your bills, you'll want to automatically transfer $1,500 into a savings account each month.

If, at the end of the month, you don't have enough money in your checking account to pay all of your bills, simply transfer some money back from your savings account to cover the shortfall.  Each time you dip into your savings, you'll know that you didn't meet your budget for that month.

Savings Systematically Works

One by-product of backing into your budget is that it forces you to save systematically, providing you with the following advantages:

• Invest your money earlier.  Each month, money is automatically being transferred into your savings accounts.  There's no reason to wait until the end of the year to put your money to work for you.

• Dollar cost averaging.  By purchasing a fixed dollar amount of a mutual fund each month, you'll buy some shares when the market is high, some shares when the market is low, but avoid investing all of your money when the market or the fund is as its peak.

Systematic Savings Opportunities

There are plenty of systematic savings programs available to you.  At work, participating in your employer's 401(k) or 403(b) plan forces you to save a set amount of money each month.  For 2006, you can contribute up to $15,000 ($20,000 if 50 or older) into these plans - or $1,250 per month. 

If you're self-employed, you can set up your SEP or Solo 401(k) and automatically transfer money from your checking account into your retirement account on a monthly or quarterly basis.  This year, you can sock away up to $42,000 into these tax-advantaged savings accounts.

Trying to save for a child's college education?  Every company that offers 529 plans and Education Savings Accounts (ESAs) includes sign up forms for automatic transfers as part of the paperwork you need to complete to set up an account.

And if you're fortunate enough to have money left over after saving for retirement and your child's education, systematically investing every month into tax-efficient mutual funds and individual stocks is a great way to build up your nest egg.