Create A Budget

The first step in creating a systematic approach to reaching your financial goals is to establish a budget. Whether you're simply trying to determine where your cash goes or you've set some goals, the best place to begin is by building a budget.

1. Determine your total income. You can't budget your spending unless you know exactly how much money you have coming in.

2. Outline your total expenses. Determine your average monthly costs.

3. Compare your income with your expenses. If your monthly expenses exceed your income, you've got to trim your spending.

4. Track your spending on a regular basis. Every month, look at how you're doing, especially if your circumstances change.

5. Set goals for yourself. Think about the goals you want to achieve and work towards them.

6. Follow the 20/10 rule. Your total debt (excluding your mortgage payments) should never be more than 20% of your annual net income (after taxes). Your monthly debt payments (excluding your mortgage payments) should never be more than 10% of your monthly net income.

Try to set aside at least 5% of your net income for savings.