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Taking Control of Your Money

Budgeting can be a process that takes some time and effort, but you have to start somewhere. And the reward for doing so can be as great as that which comes with catching the game-winning touchdown in the Super bowl, a trip to Disneyland (or wherever else your dream vacation may be).

Setting up a budget is a necessary evil. It is definitely necessary if you want to get a handle on your spending and make sure that your hard-earned money is going where you want it to go. All you have to do is stick to these three steps:

First; Figure out where your money is going

It would be an excellent idea to purchase a computer program like Quicken or Microsoft Money to track your finances. And even if you don't have a computer program, you can still develop an excellent budget using a pencil and a notebook. Take a month and watch where every single penny of your income goes and write it all down in your notebook.

Second; set up your budget

If you use one of the before mentioned programs, there will be a section to help you build your budget automatically. If not, begin by writing down how much money you earn each month from all sources. Then below that, set up categories that include your fixed monthly expenses. These are those bills you have to pay every month that never change; rent, credit card payments, car payments, insurance, etc. And lastly, below that, write down each of your monthly expenses that vary; utilities, phone bills, cable, groceries, dining out, school lunches, entertainment, medical bills, clothing, etc.. From the information that you gathered during the month while tracking where you spend your money, put in the numbers for each of these categories and any others that you feel appropriate. Include a section for school clothes, and a section for holiday gifts. Plan on setting aside a certain amount each month to prepare for these upcoming expenses. Now add up all the expenses, and if the money coming in is greater than the money going out, then great, you have a surplus. You just created your budget, and now you need to continue to do things the way you have been. Don't take it to mean you now have more money to spend. You need to put that surplus somewhere where it can grow. We'll talk about that another day.

If you have more money going out than coming in, or a shortage, then it's time to set some goals and make some changes. Identify some areas where you can cut back on spending and focus on those areas. If you don't see any, look harder. You need to figure out how to turn your shortage into a surplus. Set some specific goals, write them down on your budget, and put your budget somewhere where you will see it often. I personally like the refrigerator as the place to post my budget.

Third; Follow up

In the upcoming days and months, continue to follow where you spend your money and watch to see that it fits within your budget. Cut out the unnecessary. Distinguish between what you really need and what you just enjoy having. Ask yourself honestly, "Do I need cable? Do I need a cell phone?" Eat out less. Watch your spending at the grocery store. Use coupons and search for sales. Shop at garage sales, and pay off your debt as soon as possible. Call the credit card companies and ask them to lower your interest rates. Call your insurance company and see if they can't get you any additional discounts. If they can't, you may want to shop around. If you're still in a bind you may need to earn additional income. The most important thing to remember is that budgeting should be done with all the adults in the household. If you and your family aren't on the same page with spending, you need to get there.

This is just some basic information to help you get started. If you're serious about being in control of your money, and you should be, there is more detailed information that can be found at various web sites like, betterbudgeting.com and money.com.