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Now let's take a hard look at your income vs. your expenses. Your income in most cases is your paycheck. Your paycheck is a valuable source of financial information. It shows your gross pay, a detailed list of deductions and net pay. Part of understanding where your money has been going is knowing what these amounts are for.

Payments you are committed to are called Fixed Expenses--things like taxes, rent, mortgage payments, loan payments, or insurance. Expenses you have significant control over or which change from month to month are called Variable Expenses. These are things like food (you can avoid brand names at the grocery store), utilities (turn off the lights), clothing (wear it out) and gasoline (car pool).

Print out the following worksheet and start tracking your cash flow. A review of how you allocate your income is an important starting point for planning. It is the foundation for understanding your situation and the resources you have available to help meet your goals and objectives.

You've thought about your goals and priorities and done a cash flow analysis. The next step is to take all you've learned and put together a spending plan that works for you.