Don’t worry! A budget doesn’t have to be scary thing. Basically a budget is a tool for you to aid in managing your day to day financial decisions. Look at your budget as a snapshot or over view of you have done, can do, should do, will do. It is a picture of all things financial. If you decide you want the latest PS3 game, be prepared to take it out of your budget, otherwise – forget it!

Take you income first. After all, you won’t be spending anything, unless you have to spend. Income isn’t just your nine to five. Also be sure to include alimony, child support, or any form of income coming into your household.

Start searching for all of your statements. These need to include bank statements, utility bills, investment statements, and any other paper information that you can. You want your budget to be as accurate as possible, so the more information you are able to dig up the better.

Compose a list of expenses that you accrue each month and list them in two basic categories: fixed and variable. Fixed expenses include those items that you have a very close idea what the expense will be, and stays relatively consistent each month. Examples of this would be your credit card statement, your car payment, mortgage or rent, and your utility bills. Variables are those expenses that may change slightly from month to month. An example would be your grocery bill, gas, gifts, and eating out. When the list is completed total your over all monthly expenses for a grand total.

Once you have a grand total compare your expenses to the income you totaled in the beginning. Ideally the two balance out, or your income is greater than your expenses. In the event that your expenses are greater than your income you should look to your variable expenses. Try to shave off areas to balance the two columns. Perhaps you can’t eat out as much as you would like, or maybe you have to cut out one movie night out of the month.

Be sure to account for savings plans that you have in place. These should include college savings plans, a regular savings account or maybe just that boat you’ve been dreaming of.

It’s fairly easy to set up a budget. The hard part comes after the completion of your budget. Be self disciplined and stick with your budget. It does little to no good if you don’t. Compare your month to month budget to see how you have spent and saved. Are you happy? If not, make adjustments to next month’s budget and prepare to measure those results as well.