Budgeting

1. Know what's coming in.

Simply put, know how much income you receive each month. Income can come from a paycheck, child or spousal support or unexpected cash in the form of gifts, tax returns or rebates.

If you work different hours each week, work overtime frequently or if your income is based on commission, it can be hard to estimate this monthly figure. Consider going with your base salary, or averaging out your paychecks over the last few months.

2. List your responsibilities.

Write down bills you must pay and how much you expect to shell out. Mortgage, car loan, student loan, insurance, day care, cell phone, electricity, natural gas, fuel and groceries are more than likely on that list. Don't forget savings! Paying yourself first is one of the best things you can do for your financial future.

Paying yourself first means setting aside money designated for your savings goals before paying bills. Make it a habit and watch your account grow!

3. Know what's going out.

Hang on to your receipts so you can track your everyday spending. Drop your receipts in a jar or box nightly (after balancing your checkbook, of course) for a month. At the end of the month, tally those slips and list them in groups; you'll see some obvious spending patterns emerge. To get an accurate account of how much you spend and where your money goes, make sure you keep track of your cash purchases, too.

4. Assign categories.

Once you know what you buy and where you spend your funds, assign categories to your budget. Do you hit the drive-thru instead of bringing your lunch to work? You'll need a "dining out" category in your spending plan. If your kids are in day care, you'll need to add a "childcare" category as well. These categories will vary from person to person because we're all different. That's what makes your spending plan special-it's all about you and your family!

5. Do the math.

At the end of the month, subtract the actual amount you spent in each category from the amount you expected to spend. If you find yourself spending more or less, adjust your categories-or spending-accordingly.