• Start with a canned budget worksheet (see link below).
  • Go through your check book or bills for the last two to three months and add and delete categories from
    the worksheet to fit your expenditures.
  • Think about your hobbies and your habits and be sure to add categories for these expenses.
  • Go through your pay stubs and calculate your average monthly gross pay.
  • Do the same for any interest income, dividends, bonuses, or other miscellaneous income.
  • For each expense category, try to determine a budget amount that realistically reflects your actual
    expenses while setting targeted spending levels that will enable you to save money.
  • Once you're comfortable with your expense categories and budgeted amounts, enter expenditures from
    your checkbook from the last month.
  • Keep track of cash expenditures throughout the month and total and categorize these at the end of each
  • Subtotal the income and expense categories.
  • Subtract the total expenses from the total income to arrive at your net income.
  • If the number is negative, your expenses are greater than your income. Your situation can probably be
    greatly improved by changing your spending habits.
  • If you have a positive net income, transfer most of it to a savings or investment account at the end of
    each month. Extra cash left in a regular checking account has a way of getting spent.
  • After you've tracked your actual spending for a month or two, analyze your spending to identify where you
    can comfortably make cuts.
  • Once you've got the budgeting process in place, take an in-depth look at your largest spending
    categories, brainstorm about ways to reduce spending in specific categories, and set realistic goals.
  • Update your budget and expenses monthly.