Money is a part of life every day. What you wear, what you eat, where you live, and the fun things you do are only a few of the money related decisions you make daily.

For some people, having a million dollars wouldn’t be enough to satisfy their wants. Millions of other people manage to pay their bills, save for the future, and enjoy life while still living within their income. Managing money takes time and effort.

The way you spend or save money today helps determine what you have and whether you can pay your bills in six months, a year, or many years from now. For example, if you spend your money as fast as it comes in, you may find yourself in debt when unplanned expenses occur.

Do you have control over how you spend money? Can you live within your income—meeting expenses and putting some money into savings?

Budgeting is a way to get the most out of your dollars. It is not just about saving money, being a tightwad, or doing without. Budgeting is about deciding where your money goes and making a spending and savings plan.

No one is born with natural money management skills. Though you may have learned some money management skills from your family, you may want to manage your money differently than your parents managed theirs. You also may have learned some of these skills at school or through life experiences. Developing good money management skills takes time, practice, and patience.

The task of creating a budget and sticking to it becomes a lot more meaningful if you have identified goals that are realistic, specific, and time-oriented. For example, you might have a goal to pay down $20,000 of student loans in five years, or a goal of saving $15,000 for a down-payment on a first home. Many of us are now living on reduced incomes or have unexpected expenses and are looking to reduce spending in order to avoid debt. Setting specific goals – whether to save for a vacation you want to take in 3 months or for a retirement in 30 years – really helps motivate you especially if you remind yourself of that goal when confronting day to day decisions related to spending. You might even decide to carry an image or symbol that would remind you of that goal whenever you open your wallet to make a purchase.

If you run out of money before all your expenses are paid, you are not alone. While people work hard to earn an income, they often do not work at planning how that income is spent. There are steps you can take to make a budget work for you. The basic steps in successful budgeting include:

The following steps will help you get started on created a budget that works for you.

1. Get Organized - Get your bills and financial records together. Have a designated box, basket, or file where bills are placed when they arrive. Open the bill and mark on the outside of the envelope the date the bill should be paid. If you are going to mail the payment (rather than pay in person), the date noted should be 4-5 days before the due date to allow the payment to arrive before the due date and avoid a late fee. If you are paying the bill online, make a note of your bank’s processing time.

After paying a bill, mark it “paid” and put it in a large envelope, box, or file marked “paid bills.” Keep receipts for cash payment of bills in the same place.

2. Track Spending - Keep a folded sheet of paper or small notebook with you at all times to track all of the money you spend for one month.

3. Record Spending - Record your spending on a budget expense worksheet, adding categories if necessary to fit your spending patterns.

4. Record Income - Record all your income on the same budget worksheet.

5. Compare Expenses to Income - If your expenses are more than your income, look for things you can cut.  Determine what expenses are absolutely necessary, such as housing, utilities, and food.  Decide which other expenses can be cut to meet the necessary expenses.  Look for ways you can increase your income.

6. Make a Budget  - Fill in planned expenses and expected income on a budget sheet. As it is received, record income on an income sheet and monthly calendar.   As bills arrive, list them on the monthly calendar on the date they should be paid. Also record other monthly expenses if no bill is received, such as rent.  Plan what bills and expenses will be paid out of each paycheckr other sources of income, as well as how much of the income must be saved to pay expenses later in the month.

7. Evaluate Budget - At the end of the month, subtract expenses from income and determine if you have stayed within your budget.

8. Review Expenses and Income - Determine what needs to be changed. Do you need to cut some expenses or increase income?

Don’t be discouraged. The first few months that you try to follow your budget are a learning experience and you may need to make some changes. Remember, a budget is a guideline for spending and saving money. It helps you identify where your money goes and helps you plan how to use your money to get the things you need and want.