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If you want to manage your finances well, your budget should be the center of your money world. Essentially, a budget is a plan of how you will be spending or saving the income that you earn through out the year. It requires you to know how much income you will be earning, and how much you will be spending on either a weekly, fortnightly, monthly or yearly basis. To get you started, here are a few tips.

1. How Do You Spend Your Money

If you have no idea where to start in terms of allocating you expenses, spend a few weeks tracking your expenses. You can do this by either, listing everything in a note book as you go, or keeping all your receipts and then adding them all up at the sometime. If you really have no idea, I would suggest doing this for about a month.

Needing to do this process doesn't mean you have to delay in preparing your budget. It would be a worth while process to make some notes of what you think you spend before you start making a record of your expenses. Comparing what you think you spend and what you actually spend could be quite an interesting task, and no doubt you will be quite surprised on just how much all those little things add up.

2. Categorize Your Expenses

For most, working out your income is going to be easy. Generally, people get paid on a weekly, fortnightly or monthly basis, and unless you're on shift work, it will likely be the same each time you get paid.

Expenses however are not so straight forward. The best advice I can give here, is to categorize your expenses in a way that make sense to you. However, you should have at least the following main categories.

- Required Expenses: these are expense that you have to pay just to live, and includes items such as food, rent, mortgage repayments, and utilities.

- Debt Repayments: sadly now a days most of us have some form of debt in addition to our mortgage. In this category you should only include your minimum repayments required for your debt. If you are thinking about making additional repayments, which I highly recommend, then this should be included in a separate category.

- Luxury Expenses: these are all the other expenses that you can't seem to fit in the above categories, and if you were broke would be able to probably live with out. For me this includes Internet and cable TV, subscriptions, vet fees, and gift allowances. In addition to these amounts, there is an additional allowance that both my partner and I have, that we can spend on our own designated hobbies and is also great

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