If mention of the word "budget" makes you groan, think of it not as some nasty chore or way to deprive yourself but as spring cleaning. One good financial cleaning and you may have your money life in order for years to come.
Having a good budget is particularly important if your life situation is changing because of a marriage, divorce, new baby or any other event that alters your finances dramatically. But every household can save with a smart budget.
Your Cash Flow
The crux of budgeting is knowing your monthly spending needs and habits. Creating a budget means tracking your personal cash flow -- that is, how much money comes in and how much goes out.
Adding up your monthly income is easy, but tallying up all your spending takes a little more effort.
First, collect all your bills, your credit card statements, your checkbook register, and receipts for your groceries, gas or anything else you buy with cash.
If you haven't been keeping good records, you may have to keep track of every dollar you spend for a month before you draw up an accurate budget. Track your expenses by making entries in a notebook, or use a money management program such as Quicken or Microsoft Money. Those programs make budgeting easy. They really are worth the investment and often can be found discounted at computer retailers or bookstores.