Only about 41% of Americans regularly contribute money to a savings account. If you’re like most people, you pay your bills and spend what is left over. If you are carrying a large credit debt, there may not be anything left over and so you are likely to whip out a credit card to pay for small indulgences, putting you further into debt.

Everyone needs to save. No one can predict when a financial catastrophe (such as loss of a job) can strike. If you find you are always planning to save but wait until after you pay your bills to determine what you have available to save, you may never save a dime. This money never materializes because you consider any financial cushion to be your spending money.

If this is you, then the only way to save is to just do it. Have a portion of your pay, at least 5% to 10% automatically deposited in a savings account before you get it. Your spending will also automatically adjust to accomodate your slightly lower take-home and all it will really cost you is a few lattes or some impulse spending for things you didn’t actually need.

Saving for the future is essential. Don’t plan on it, budget for it or think about it. Just do it!

The best way to start making a budget and analyzing expenses is to start with documentation, lots of it. If you have them, financial records for 12 months is preferable. Luckily, with modern technology and online access to most accounts you may not even need pay stubs, bank account statements, or credit card statements. Utility bills are a good thing to have as usage differs month to month and you want to take an average.

First list all your income. This should include all sources of income, including child support and loan proceeds. This is the easy part.

Next, list expenses. Use categories to make it easier for you to see what proportion of your income gets spent where. Add or delete categories from my list to fit your personal lifestyle. Typical categories are:

* Rent or Mortgage payments (include insurance)
* Utilities - Electricity, Heat, Phone, Cable or Satellite TV, DSL or other internet service, Water and Sewer
* Food - include not only groceries but all food expenses, like school lunches and eating out
* Transportation - car payments, insurance, fuel and maintenance
* Clothing - expenditures for purchases and costs of cleaning
* Medical - include any payment for medical services or prescription drugs, include expenses for eye exams and eyeglasses if applicable
* Miscellaneous - include here any regular expense that doesn’t fit into other categories, such as music lessons for your cat

At this point you can add the totals on both the income and the outflow charts. You probably have already noticed that there is a large sum of money missing and unaccounted for. Finding out where that money goes is your next job. Track any expense you make in the next week. If you stop at the ATM, record what you took out and how you spent it, record every cup of coffee or order of pizza. Any time you spend anything outside of the major expense categories, write it down!

Once you have that total, you can make your budget.