1. Create 6 to 12 categories of expenses and track for 2 to 3 months
These can be categories such as food, housing, recreation, entertainment, travel, and vacation. You can also include non-expense categories such as retirement savings (ex. IRA contributions) or long-term savings plans (ex. saving up to buy a car, pay for college, take a vacation). Most people are surprised at what they find out about where the money goes. This takes discipline, makes you think before spending, and helps you to build a more accurate budget
2. Figure out which spending categories are flexible and which are not flexible.
3. Always go over your bank statement and credit card bill carefully at least monthly.
4. Use cash flow to assist with payment requirements.
5. Be realistic!