Track Income and Expenses

• Before you can set up a personal budget, you must determine how much money you bring in per month and where it goes. Write down the exact amount of each paycheck and each expense as it occurs. When you write down your expenses, categorize them. For example, if you buy coffee, list exactly what you bought and give it the category of "food and drink." At the end of the month, examine how much you spent in each category and compare your income to your expenses.
  
  

Set Financial Goals

• You need to set both short- and long-term goals so that you use your money to meet immediate needs but don't sabotage yourself by spending money that you need to save. List your fixed and necessary expenses first, such as your rent and utility bills. Determine when each of these bills needs to be paid and make paying them on time one of your short-term goals. Subtract the amounts of these bills from your total income to determine how much disposable income you have. List long-term goals such as traveling or purchasing a home and decide how much of your disposable income you want to save towards these goals each month.
  
  

Cut Expenses

• If you do not have enough money to cover your monthly expenses or you don't seem to have enough coming in to meet your savings goals, you must cut your expenses. Examine non-essential expenses such as eating out or going to the movies. Ask yourself which of these expenses you can cut. You do not have to completely cut out these things, but cutting back on them will help you save money. If you still need help after cutting expenses, examine your essential expenses and determine if there is any way to lower them, such as not using as much electricity or switching to a less expensive phone plan.
  
  

Credit and Budgeting

• Ideally, your budget plan helps you live within your means so that you do not have to use credit. However, depending on how often you get paid, you may have to use credit occasionally. For example, if your utility bill is due the day before your paycheck comes, you might decide to use credit to pay your utility bill. Plan for this in your budget by deciding when you will use credit and when you will pay it back. If an unexpected emergency comes up that you don't have the funds to cover, such as car repairs, adjust your budget to pay back your credit card company as soon as possible.