HOW TO MAKE A BUDGET
Making a budget is one of the easiest ways to really understand where you money is going every month, and to stick with a plan to pay off bills and start building up your savings.

Making a budget is easier than you might think.

Before you get started, download and print out this handy budget worksheet:
Budget Worksheet (PDF, 205 KB)

Step 1: Assess the Current Situation

Fill in the column market "current". You can estimate the amounts, or for more accurate budgeting, save all of your receipts for a month. When the month is up, collect your receipts, credit card statements, and checkbook, create a total for each budget category, and fill out the worksheet.

Step 2: Cut or Keep

Look at your spending patterns. Do you really need to rent five movies a month? Maybe you'd be fine with three. Could you check out books from the library rather than buying them? By all means, if your morning cup of coffee brings you enjoyment, don't cut it out of your schedule, but if you find expenses that really aren't necessary (perhaps they've just become a habit), then your money might be better spent on paying off debts or socking it away in savings.

Step 3: Make a New Budget

Use the column marked "new" to reallocate your money appropriately. You can use any extra money after expenses to pay off debts, put away for savings, or to purchase something you really want or need.

Budgets aren't hard to create, and once you're in the swing of one you will feel secure in knowing where your money is going every month. So start budgeting now!

Stick To It

These tips might make sticking to your budget easier.

• Tip 1:

  If you find it hard to keep those credit cards away, try cash. You can make an envelope for each expense category and put in cash. If you run out of money, that's it for the month. But if you have any extra, you can either roll it over into next month, or sock it away in savings.

• Tip 2:

  Participate in your company's retirement plan. It's the easiest way to make sure you're putting away money for those silver years. And, because retirement plan money is usually taken out before taxes, the difference in your take-home pay is almost not noticeable.

• Tip 3:

  Don't deprive yourself. Enjoying life is important, and if eating lunch out twice a week makes you happy, go out to eat! Just make sure you aren't getting into debt to do so.