ll of us— individuals, corporations, organizations, and governments— use money. We all need to have an income, that is, money that we earn or acquire in some way, and we all have expenses, that is, items and services that we must pay for. In an ideal world, the income would always be greater than the expenses. Unfortunately, lots of people and organizations, including our own U.S. government, spend more on expenses than they bring in as income. By developing a personal budget, you can learn to reconcile your income and expenses, and be free of the stress that comes with living beyond your means.

Stick to a Personal BudgetA good way to create a personal budget is by looking at your records for the last year. You need to know exactly what you’ve been spending money on. Some expenses, like the mortgage, are the same each month and are due at the same time. These expenses are easy to fit into your budget, and come as no surprise to anyone. It’s the incidental expenses that are probably causing you to live beyond your means and never have enough money to finish the month. Sifting through the prior year’s records will take awhile, but you’ll discover places you were wasting cash that you didn’t even know about. As you look through your check book ledger and credit card bills, categorize every single check you wrote or charge you made. Here are some suggestions for headings: