For many people, budgeting means unpleasant thoughts of self-denial and endless record keeping. However, it doesn’t have to be a thankless chore. A budget is basically a saving and spending plan that can help you reach your financial goals.

Whether you go the automated route or stick with the pencil and paper approach, the act of creating a budget is basically the same. You start by listing all sources of monthly income, including wages and salary, bonuses and commissions, interest, dividends, and rental income. Next, you identify your major expense categories.

Major expenses
Consider fixed monthly expenses such as mortgage or rent, insurance premiums, child care, and utilities, as well as more flexible and intermittent expenses like food, clothing, dental bills, gifts and car repairs. Then, grab your pay stubs, checkbook register, and credit card statements and begin allocating your expenses to the different categories you created. Many budget builders find that their records reflect only a portion of their spending and, for some people; it's a relatively small portion. What happens is that all those cash outlays for gourmet coffee, video rentals, and magazines seem to fall between the cracks.

Track every dime
If you can't account for a large chunk of your income, try for a few months to carry around a small notebook and record every dime you spend. While spending $5 a day on incidentals may seem trivial, the $1,825 you could have at the end of a year if you did not spend it certainly is not.

Cutting back
Look for expenses that can be cut back so you'll have more money for investing, vacations, your children's college fund, and other purposes. A key strategy for meeting your financial goals is to get in the habit of paying yourself first. Rather than paying all the bills and allocating what is left over, if anything, to savings, you should determine the amount you wish to save each month and set it aside before you pay other bills.

Good records are important
It is important that you monitor your budget on a regular basis. Once a month, or more frequently if you prefer, record and categorize the current month's income and expenses. Then take a look at how you have done.