• Calculating your current finances is the first step to money management.bureau image by razorconcept from Fotolia.com
  
  Budgets are important to provide an ongoing method of reviewing your spending. Budgeting does take time, so a person might avoid tackling setting up a budget and making changes as needed. Also, you may feel guilt or shame if you splurge and go over the budget. Disciplining yourself now to budget will have a positive impact later. You may have dreams for a house, a new car or simply to have extra money at the end of the month.
  
  

Calculate Earnings

• Calculate your budget by figuring out what the household actually brings in. You can calculate how much you make based on four paychecks a month, two if you get paid bi-weekly, or one for monthly payment. By using any of these calculations, you actually receive bonus money as some months have an extra payday. This additional money can be spent on holidays, birthdays or similar expenses. Add in any bonuses, commissions or tips. The easiest way to figure this is to take the amount you made last year for this additional money and divide by 12.
  
  

Expenses

• Calculate your expenses every month. Write down the monthly bills such as phone, electricity, rent, insurance and cable TV. Average other bills such as groceries, fuel and parking. Spend time on this step to make sure you capture all your expenses. If you pay for your child's dance lessons or if you take your grandmother out to eat once a month, track the expense.
  
  

Making Adjustments

• Determine if you have any money left over each month or if you have a shortage. If you have any money left over, set aside a portion to save -- even if only $5 or $10 a month. Although you may have some extra money, you should reduce your expenses. For example, if you don't watch most channels on your satellite TV service, consider reducing your plan. Take the savings and save for a vacation or something important you have always wanted to do.
  
  If you have a shortage every month, take immediate steps to reduce spending. Begin one by one looking at your expenses. If your entire family has cell phones, you may need to shop around for a better deal. Look closely at your food expenses and see if most of the money spent is on quick, high-cost, low-nutrition food. Eliminating four bags of potato chips a month (one a week), can save much money over a year.
  
  

Use Budgeting Programs

• Seek help to make it easier to tackle creating a budget. You can get free budgeting tools from places such as Mint.com (see Resources). In addition, if you're associated with a community of like-minded budget-conscience people, it's easier to stay on track.