Some people are spending money than what they earn because they do not fully understand how to budget. Budget is a plan of action than can help you to live within your means, pay off bills or save for the future. Not budgeting can lead to high credit card statement, problem of paying bills, and sometimes bankruptcy. Buy setting up budget and following it you will see positive result in relatively short amount of time.

Record everything you spend, keep the receipt in a small book, include; gas, grocery, coffee and dining and everything. Write down the amount of income you receive every month, if your income varies because you work on commission take an average for the last 12 months.

Figure all of your necessary and write them down. You can create chart by hand or use online resources, add your mortgage, insurance, card payment, taxes, utilities, etc. subtract all your expenses from your total income for one month. If your income is higher then you are doing well. But if your income is less then you need to adjust your spending habit so that you are not negative at the end of the month.

Calculate how much you need each month for the necessities and decide how much extra you can put toward fun money and entertaining. Change your spending habit, evaluate and adjust how much you eat out, bring lunch and coffee from home, etc. create more money, get for a second job, like baby sitter, sell items or garage sale. Follow your budget and make changes when you need do. Allow extra money around holiday and birthday. Keep track of everything you are spending so that you do not go back to your old spending habits.

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