Now that you know how much you spend on each part of your life, you need to create a plan.

Begin by looking at the numbers you generated from the exercises in the previous article. You figured out how much your bills tend to run. Now you need to find out how much is left. Some bills are flexible, such as credit card payments. If you pay only the minimum on each card, you will never pay them off. Plan to pay as much as possible on the card with the highest interest and
slightly over the minimums for the rest. Once you know how much money is left over each month, you can begin to plan the budget.

Begin by writing the names of each month of the year, leaving spaces for notes. Under each month, write any event that has special expenses required, such as holidays, youth camp or taxes. Make a note as to how much money you plan to need for each of these. Most holidays are somewhat flexible, so be prepared to juggle those amounts as you create your budget. Use a pencil, not a pen. Now add up how much additional money you are spending each month. Are you within your income or over it? If you are over it, adjust.

You should start your budget with two items, and then build from there. Begin with tithing and offerings. Pay God first and everything else will fall into place. Next, pay yourself. Put something into savings, even if it is small. Plan to increase the amount over time. When your credit cards are paid off, put the money you were spending there into savings. This savings account will give you a surprising amount of security. Set a goal to have a month's worth of income in the account as soon as possible. Then continue to build from there. You may want two kinds of savings: one for long-term security and needs, and one for shorter-term expenses, such as a new sofa or Christmas. I have a bank account separate from that of my family, for money I earn writing. This account covers those smaller savings needs. In addition, I have a section of my wallet for the next holiday.

Now put into your budget any fixed expenses–those bills that are exactly the same each month. Add everything up to this point and see how you are doing. Still money left over? If not, you are living far beyond your means. You may need to consider a less expensive home or other changes in your lifestyle.

Now figure out how much to budget for bills which change, such as gas and electric. You researched how much you spend each month on these and figured out an average. However, some months are higher than the average. There are several ways to approach this problem. Many utility companies allow you to sign up for level pay. If your budget is very tight, this might help you. You pay the same amount every month regardless of what you spend. The amount is based on previous bills. If you spend much more or less, it is adjusted the following year to make up the difference, so this plan is not giving you permission to run your heat and air full blast all year. Another plan is to budget for the highest amount each month. If the bill is less, transfer the difference to your savings or make an extra credit card or mortgage payment. As you become
more skilled at working within a budget, you will be able to adapt the budget each month to the amount, but keep your plan simple while you are learning.

Once again, stop and figure out how much you are spending each month. Is it more than you bring home? It's time to make adjustments in your cost of living. You may need to make some choices. When our budget became too tight, we took a family vote and chose to give up cable television. Interestingly, the children did not miss it, since they had been trained to watch little television and because they themselves had suggested the elimination of cable. Be realistic about what is a necessity.

Now put in your food, fuel, and general expenses–cleaning supplies and anything else you need to run your home. You may have to adjust your expenses based on the available money. Remember that you still have not put in everything else you spend money on, so you can't use everything left over yet. Food costs are usually flexible and cutting costs will be discussed next week.

What else is on your budget? Think about co-pays for medical care, children's allowances, entertainment, enrollment fees? Place these in your budget. Add up what you've spent and see if anything is left. If not, you know what to do.

Remember the list of months? It's time to take a look at that. Place those items into your monthly budget and decide how to save for them. Make a promise to yourself that you will not go into debt for these things. Christmas budgets should be based on a realistic understanding of what you can afford. If your children are accustomed to lavish, but credit-card financed holidays, you will
need to talk to them about your new lifestyle.

When you are finished, go back and look at all the things you spend money on. Did you leave anything out? Are you satisfied with the current state of your budget? Can you survive on your current income without using credit? If not, you and your spouse should set aside quiet time to rework your lifestyle. You will need to decide how to help your children accept and participate in these changes. You are likely to do some complicated juggling before you find a budget that works for you. As you pay down debts, make changes in your life and become more skilled at living on a budget, you will make adjustments. However, you will find that while this may seem limiting and stressful at first, over time, the budget will provide a sense of security and well-being.