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The secret to a lifetime of true independence and financial security begins with the knowledge of how much you are spending and where that money is going. If money worries keep you awake at night, if you're tired of living month to month, and you wonder how you'll ever pay off your debts, you can start back on the road to financial security simply and easily. You don't have to be a financial genius and you don't need a computer. Just grab a pad, pencil and your check register.

List all your fixed obligations; your mortgage, car payments, other loans with a fixed monthly payment, credit cards that carry a balance, utilities (average them if you aren't on a budget plan), insurance premiums, taxes and so on. If you pay any of these bills quarterly, semi-annually or annually, just figure the monthly cost.

Here's a quick tip that will keep those bills from sneaking up on you. Open a money market account and deposit the funds every month. Better yet, arrange a direct deposit from each paycheck, and let the money earn a few extra dollars. After a few paychecks, you won't even miss the money. When these bills show up out of the blue, simply write a check out of your money market account. No surprises! If you can manage, add a little extra from each paycheck. Before you know it, your "escrow account" will be doing double duty as an emergency fund.

Take a large envelope, a file folder, or even a shoe box, label it SPENDING and put it in a convenient location. For the next month, save all of your receipts and put them in your container. Remember to include all of your out of pocket expenses too - no matter how small. If you don't have a receipt, just use a piece of paper to record the expense.

At the end of the month, set aside an hour or so to sit down and go through all the receipts you've been collecting. As you sort through your receipts, a clear picture of where your money is going will begin to emerge. Tally up the receipts using categories that make sense to you; groceries, clothing, your morning coffee, newspapers, lunches, snacks, etc. Add your totals to your list of fixed obligations.

You might be surprised. It's all too easy to overspend without realizing it - especially on the little things. But now that you know how much you're spending, you can make adjustments.

Take a close look at all your categories. Each time you cut down or eliminate something, list the new number until you've exhausted all your categories. Congratulations! You just created the first draft of your new budget. Add everything together and subtract the total from your income - that's how much you'll be saving each month.

Where to put those savings to best use? Paying off your credit card(s) or other consumer debt will give you the most bang for your buck. List all your credit card balances and look carefully at how much of your monthly payment is interest. Take the money you're saving with your new budget and pay off your cards - start with the lowest balance. Before you know it, instead of spending your future wealth, you'll have more money to add to your savings.

If you're like most people, you are paid every two weeks. Twice a year you'll have a three check month. Use those bonus dollars wisely. Pay off more of your debt. Add some of the extra to your money market escrow account. Next time your refrigerator dies suddenly, you can buy a new one with cash. No more 15% interest charges.

Discovering where your money goes each month is just the beginning. You'll know where to put your money to work for you so you'll have true independence, because you'll be building your future instead of spending it.

Learn more about this author, John McDevitt.
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