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Start with a canned budget worksheet (see link below).
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Go through your check book or bills for the last two to three months and add and delete
categories from the worksheet to fit your expenditures.
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Think about your hobbies and your habits and be sure to add categories for these expenses.
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Go through your pay stubs and calculate your average monthly gross pay.
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Do the same for any interest income, dividends, bonuses, or other miscellaneous income.
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For each expense category, try to determine a budget amount that realistically reflects your actual expenses while setting targeted spending levels that will enable you to save money.
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Once you're comfortable with your expense categories and budgeted amounts, enter expenditures from your checkbook from the last month.
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Keep track of cash expenditures throughout the month and total and categorize these at the end of each month.
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Subtotal the income and expense categories.
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Subtract the total expenses from the total income to arrive at your net income.
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If the number is negative, your expenses are greater than your income. Your situation can probably be greatly improved by changing your spending habits.
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If you have a positive net income, transfer most of it to a savings or investment account at the end of each month. Extra cash left in a regular checking account has a way of getting spent.
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After you've tracked your actual spending for a month or two, analyze your spending to identify where you can comfortably make cuts.
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Once you've got the budgeting process in place, take an in-depth look at your largest spending
categories, brainstorm about ways to reduce spending in specific categories, and set realistic goals
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Update your budget and expenses monthly.
