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Does it seem like you always have too much month and not enough money?  On the days just before pay day are you scrapping together spare change to make ends meet?  Setting up a personal budget is a good way to get a handle on where all your money is going.  It will help you save money, and cut out unnecessary spending…and it’s easy to do!  Just grab a pencil and a piece of paper and let’s start by figuring out a monthly budget (if you prefer, you could also figure out your yearly, or weekly budget).

1. Income
First, on the left side of the paper write down your monthly income, that is, how much money you make in a month after taxes.  Check your latest pay stubs to make sure you’ve got the accurate amount.  If you have any other income, such as child support payments, or any second income you may have from odd jobs, include that as well.

2. Expenses
Now that you can see how much money you take in, write down your expenses on the right side of the paper.  Start with fixed expenses, those items that are the same every month, like your rent or mortgage payment, Click here to listen!your car payment (or other transportation costs), child care costs, and insurance.  Next, take a look at your bills for such things as electricity, gas, water, and telephone.  Some of these expenses may be the same each month, but some will fluctuate. Try and look at a few months to figure out an average of these, and write it down.  Next, try and estimate what you spend on every day items, like food, clothes, personal items, gas, entertainment, dining out, snacks, coffee, soda, newspapers, etc. Remember to include an estimate of how much you spend on less frequent expenses, such as gifts.  Finally, include an estimate of spending on emergency items like doctor visits, car repairs, eyeglasses, etc.

3. The Bottom Line
Next, subtract your monthly expenses from your monthly income.  Hopefully, you will have more income than you spend.  If your expenses are more than your income, however, you will have to re-visit your expenses to see where you can save money. 

Once you see where your money is going, it's easier to set up a budget to control your spending and hopefully build up your savings. Considering putting at least some of any extra money into a savings account for emergency expenses or for a major purchase in the future, such as a car, a home, education, or retirement.

Setting up a budget and sticking to it can be difficult, especially when you first start, but it's a good way to keep track of your money, and hopefully make it work as hard for you as you do to earn it.