The hardest thing about budgeting is convincing yourself that you need a budget, especially if you have limited resources, but setting up a realistic budget is the first step towards establishing control over your finances. Creating a budget provides a reality check of how much money you have and how it’s spent from month to month. Maintaining a budget helps you live within your means and identify opportunities for saving money.

If you’ve never done this before, remember that being as detailed as possible is very important.

First, gather together your monthly bills, credit card statements, bank statements, pay stubs from anyone contributing to your household income and any receipts you may have. Some items, like rent or utility bills, are easier to account for. However, don’t forget to include close estimates of miscellaneous monthly expenses you paid in cash like amounts spent on gas, eating out and going to the movies. The more details you provide, the more realistic (and therefore useful) your budgeting process will be.

To make it easier for you to set up a budget, we provide a home budget analysis calculator for you to use.

After you create a budget, you will know exactly where you stand financially for the month. If your income is higher than your expenses, you have survived the month financially. If your expenses are higher than your income, there are problems.

In either case, your goal should be to increase your available sources of income while decreasing your monthly expenses. Going forward, you should redo your budget on a monthly basis to see how you are doing and to help you get on track and stay there.

Read more about increasing your cash flow here.