by Lyle Evans

Have you ever found yourself wondering where all the money has gone and its not the end of the month? There are things we can do to help ourselves eliminate being in this situation. Listed below are the steps you may follow, along with a brief discussion of each:

1. Determine monthly take-home income
2. Understand all bills and expenses
3. Tracking expenses
4. Building up savings and retirement
5. Spend less then you make

Determine Monthly Take-Home Income

Whether you are a single individual or a family, you need to determine how much money is being made each month. Once this is determined the family or individual knows how much money there is to work with. If we find ourselves spending more than we make, then some decisions need to be made.

There are basically three options: get another job to subsidize your income, get more education or training to get a better paying job, or decrease your spending. Each option should be considered carefully by the individual or family.

Understand Bills and Expenses

Account for your bills and the money you spend during your daily activities. This can be done by saving copies of your paid bills and recording your daily expenses in a small notebook. Once or twice a month take inventory of your expenses. Daily expenses would include all money paid out of pocket except your monthly bills.

Tracking Your Expenses

We have created a budget using the computer to track our finances. A good spreadsheet or financial software will help track your expenditures. We create categories in our budget that allow us to micro-manage our expenditures.

A brief example will help in better demonstrating this point. We have categories like food, insurance, auto, fuel, clothing, savings, children's expenses, etc. You can come up with whatever categories fit your needs.

After you have determined what your monthly take-home income is, you need to divide it up between your categories. The total amount placed in all the categories needs to equal your take-home income. The key to making the tracking effective is to enter your expenses regularly and stay within the amount allotted in each category.

If your track your expenses effectively, in just a few months' time you will find areas where you might be able to make changes and save money. We have noticed how much money we spend on frivolous stuff. Following a budget and tracking expenses takes inner commitment to be effective.

Savings Account and Retirement

A big part of any budget should be setting aside money into a savings account. Money in a savings account provides a little cushion in case of an emergency, loss of employment, or disaster. The amount that should be set aside in a savings account will vary depending on your circumstances.

The important thing is that you start. Over time your savings account will grow larger and accrue interest. As your employment circumstances improve, you may want to increase the amount you are putting into savings.

Just a side note about saving for retirement. If your employer has a 401K program, it would be beneficial to look into the program. Many employers have a matching program where they will match a certain percentage of what you contribute.

If your employment does not have a retirement savings plan, then you may want to look at budgeting money for your own long-term savings plan. This plan could be investing in the stock market or an individual IRA. You may want to seek advice from a financial expert.

Spend Less Than You Make

This has been a age-old problem. People in general have a tendency to spend more than they make. It takes strength and inner commitment to live within one's means and save for a rainy day.

A simple rule of thumb is to spend less then you make and save as much as you can. This practice does not have to be done overnight, but steady improvements will yield great financial dividends.

Setting up your budget takes time and effort, but can be very rewarding. Getting in control of your financial future can be done with the help of a budget and some personal discipline on your part. Good luck in your budgeting endeavors.

About the author © Simple Joe, Inc. Lyle Evans is a software testing specialist for Simple Joe, Inc., makers of the popular Simple Joe's Income & Expenses PC software. Income & Expenses is a quick and simple way to keep track of your cash flow and stay within your budget. Income & Expenses is ideal for personal, business, home and club accounting.. This article may be freely distributed as long as the copyright, author's information and an active link (where possible) are included.