Managing your money may seem difficult, but it's really not. It's simply creating a flexible spending plan or budget and sticking with it. A budget will help you take control of your money. Save for short-term and long-term goals, create a retirement and emergency savings, meet your needs for living expenses, plan for upcoming events and expenses, achieve financial goals and stay out of debt. It will show you exactly where you stand with your finances.

Steps to creating a budget:

Step 1: Track your spending
It is important that you track your personal cash flow-—how much money you have coming in and going out. Create a list of all of your monthly income. This amount will set the cap on your total budget. Next, keep track of every dollar for at least a month so you will know where you are spending. Break your expenses into two categories: essential expenses or things you need for everyday life, such as housing and food and non-essential expenses or things you want, such as shoes, books, music, etc. Additionally, essential expenses can be broken down into fixed and variable expenses. Fixed expenses are the same amount each month, such as mortgage or rent payments, school loans, car payments, car insurance, etc. Variable expenses fluctuate each month, such as car repairs, gasoline, food, electricity, phone, etc. By tracking your expenses, you can get your finances under control and better plan for your future needs.

Step 2: Create a flexible budget
Use the information from tracking your expenses to create a monthly budget. It can be as basic or complex as you want it to be, but it should always be flexible and suit your individual circumstances. Create and calculate your own monthly budget with our Home Budget Analysis calculator. Once you know where you stand financially, you can start to put a plan into action.

Step 3: Stick to your budget
Congratulations on setting up your budget. Now comes the hard part, sticking to it. Look over your budget every month and make any necessary changes. If you truly want to stick to your budget, it helps to have short-term and long-term goals. Constantly working toward something you really want, such as a house or secure retirement, will make sticking to your budget much easier.