1. Understand Your Personal Financial Position
Collect your recent bank statements, credit card statements and receipts from the last 3 or more months. Create a list of all of the expenses you have paid, separated by category and month. For example, you will have a list of "entertainment" expenses for the month of "June" consisting of movies, dining out, going to clubs, enjoying a hobby or other ways you entertain yourself during the month. Total the expenses for each category and each month.
Add up all of the income you received during the same period for the bills you have written down. Subtract the higher number from the lower number to find out your net earnings or losses for the previous months.
2. Budget Money for Now
Take control of your spending right away, especially if you are losing money or gaining very little every month. You should look through your expenses to lower money spent in areas you can control immediately, such as entertainment expenses. Spend a few days or weeks finding ways to lower payments for insurance, loans, phone bills and other expenses by changing service providers. Set up the amount of money you are willing to spend in each area of your expenses and stick to that amount, no matter what happens.
3. Budget for Your Future
Plan ahead for future financial events as you create your personal budget. For example, if you want to go on a 2-week vacation every year, purchase a car every 3 years or buy a house in 5 years, start saving money in your budget, earmarking funds for those items. You can make payments to your fund in a separate savings account to move the money out of sight and gain some interest until it is used. When you get a raise or pay off a loan, put those funds toward future uses and savings, instead of increasing your current spending. Protect your future by saving an amount equal to 3 months' worth of salary to meet unexpected emergencies and cover time between jobs.
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