A budget is an essential element in money management. If you do not know where and when money is going to be spent, there is simply no way to control it. If you are not “made of money”, and who among us is, then control measures must be in place to maximize the money you do have.

Years ago when I was first married, my husband sat me down and wanted to discuss the “budget”. I cringed at those words. I didn't want to be told how or when I was going to spend money. So he changed his tactic and told me that we needed to work on our spending plan. Now, that got my attention. I liked the idea of knowing that we were going to be doing something about spending! Just changing the words allowed me to be more open to the idea.

In developing your spending plan, you must first keep careful records of what and where you are currently spending your money. This can be as simple as just writing down items in a notebook or as complex as buying some financial software to keep track of purchases. You may even consider keeping a folder or envelope in the car or in your purse where you can keep receipts. One of the most important elements though is recording every purchase. Keep all those receipts and write down every time you spend money, whether it is a cash purchase, by check, credit card, automatic payment, or withdrawal from the ATM. Later, you can put these purchases into categories and identity your spending pattern. How much of your money goes to food, eating out, gas, clothing, housing, car payments, etc. It will take some time to train yourself to do this, but once you establish this habit, it will go a long way to helping you really control your spending. Once you have identified your current spending, then you are ready to make a plan for future spending.

Developing a spending plan is one step to gaining control of your money and making the most of what you have.