Step One: Compare your income to your expenses.
Many people who find themselves in financial difficulty have expenses that are greater than their income, but fail to realize it as soon as they might because they haven't developed a budget to compare the two. In preparing your Initial Budget, it's acceptable to estimate your monthly net income. Be sure to include any alternative forms of income that you may have, such as disability payments, child support, alimony, or any other money received on a regular basis. Don't include gifts, gambling winnings or any other type of irregular, unreliable sources of income.
Step Two: Gather ALL your bills, including your utility bills, rent or mortgage payments, credit card statements, receipts for groceries, gas, and anything else that you bought with cash.
You should also have your checkbook register available to review any additional expenditures you made during the month.
At this point, it would also be helpful to become familiar with the different categories that make up a budget: Home, Travel, Debt, Savings and Other. Sort your records by category when completing your budget.