Create A Spending Plan

Create A Budget

Most people don't know how much they spend each day. They may know about the big-ticket items, the rent and mortgage payments and the utility bills. But they lose track of how much they spend on extras like restaurants, dry cleaners and video rentals.

Creating a budget, or a spending plan, is the first step to successful money management. It is a framework for "living within your means." The key to creating a viable budget that can work over the long term is understanding exactly where the money is coming and going. Take the time to make a budget that fits your income and needs.

A budget has two parts, income and expenses. The object is to keep your expenses at or below your income. To do this, review your income and expenses for the last few months. Your credit card statement, checkbook register, and cash receipts will give you a good idea of what you spend and where it goes.

Based on income and expenses, set up a budget that allocates monthly amounts for all categories of spending. Eliminate unnecessary costs: eat at home rather than dine out; rent movies rather than go to movie theaters; cancel cable television service.