Creating a budget isn't difficult. All you need to do is spend some time organizing and planning. Once it's set up, a budget can be easy to maintain. Just follow the steps below to help with your budget planning.

Step 1: Set your goals
The first thing you need to do is identify your goals - a new home, early retirement, even an education. You can group your goals into three areas: short-term, mid-term and long-term financial goals. Ask yourself: What's important to me? What do I need? What do I want? Your answers to these questions will help define your goals. If you're married, you and your spouse should discuss your answers and decide what your shared goals will be. Then write down those goals. Once you know what you want, you can begin to budget accordingly.

• Short-term goals: These are goals that you'll achieve within the next year, give or take a few months. They may include paying off credit card dues, purchasing a new television or refrigerator, or saving for a vacation.
• Mid-term goals: These are goals that you want to achieve in the next two or five years. For example, you may want to save for a downpayment on a house or new furniture for your home.
• Long-term goals: These are goals that take more than five years to reach. Retirement savings and college expenses are common examples.

• Pay slips
• Your income tax return
• Checkbook records
• Credit card statements
• Payment information for major purchases such as car loans
• Financial statements from banks and financial institutions

• What you earn: Add your income from various sources, including "take-home pay" after taxes, commissions or bonuses, Social Security or retirement benefits, disability benefits, interest income, dividends, etc.
  
  
• What you spend: Add your fixed and variable expenses. Fixed expenses are those payments whose amounts don't change every month (rent, mortgage, insurance, loan payments, retirement savings, etc.) and usually cannot be eliminated. Variable expenses are those that change (cable television, groceries, gas for your car, telephone, etc.) and could be reduced or eliminated.
  
  
• The bottom line: Subtract total expenses from total income. The amount left over is called "discretionary income". This is the money that you can use for emergencies and meeting budget goals.

Step 4: Check your bottom line
Your bottom line is the difference between what you earn and what you spend. It tells you if you're spending too much. If the figure is positive, you can increase the amount you pay for debt or credit card dues, or add more to your savings. If the figure is negative, you are spending more than you earn and probably paying for the difference using credit.

If you're spending more than 15-20% of take-home pay on repaying debts and credit cards, you could be in a danger zone. If your bottom line is negative, you need to examine your expenses, especially the variable ones, to help bring your spending under control.

Step 5: Keep track of expenses
After you do your first budget calculation, start keeping a monthly expense record. Even if your bottom line is positive, it's still important to learn everything you can about how you spend your money.

Carry a small notebook everywhere and record all purchases and withdrawals. You'll be amazed at what you learn about your spending habits. For example, many people find that they spend thousands of pesos each year on snacks, clothes or cellular phone bills. People usually get into trouble with non-essentials - the things they could easily do without. The goal of tracking expenses is to understand where you're spending your money.