Controlling your financial affairs requires a budget. Whether you make thousands of dollars a year or hundreds of thousands of dollars a year, a budget is the first and most important step you can take towards putting your money to work for you instead of being controlled by it and forever falling short of your financial goals.

If you think you know where your money goes without keeping detailed records, prove it to yourself by keeping track of every cent you spend for one month. We guarantee you'll be surprised and perhaps shocked by how much some of your "small" expenditures add up to. If you don't think those small purchases mean much, see how they can really add up over time by trying a saving/spending calculator. Enter the cost and frequency of a habit or indulgence and how many years you expect it to continue. Click a button and see not only how much you'll spend over the specified time period, but how much that same amount would grow to if you invested it at various rates of return. Some examples are shown in the table below:

THE $$$ ADD UP:
1 cup of coffee of a day	$390/yr
2 packs of cigarettes a day	$2190 - $3285/yr
1 hardback or 3 paperback per month	$690/yr
Lunch out 5 days per week (@$5-$10/day)	$1300 - $2600/yr.
3 drinks at a bar each week	$780/yr.

Budgeting and tracking your expenses will show you where your money goes and can help you identify ways to more easily achieve your financial goals, whether they are saving for a down payment on a house, starting a college for your kids, buying a new car, planning for retirement, paying off the credit cards, or saving for that trip to Europe.

Given its importance, we have an entire section on the subject of budgeting. Follow all of the steps carefully and you will have not only a detailed understanding of your expenses, but you will have identified ways to save for your financial goals.

Once you have completed your budget, then you can proceed to the next step in the financial planning process.

Step Five - Define the costs of your goals