Most Americans have to follow a budget of some kind. And if you don’t, well, you should. Whether you are you are just starting out in a career or happily enjoying the golden years of retirement, creating and sticking to a budget will help you to better manage your funds as well as help you to reach financial goals.

When people think of creating a budget, many of them think of taking all of their income and recording places for it to go. While this is along the right track, there is much more to it. In order to create a proper budget you need to have a list of all of your income. This includes pay statements, bank statements and your previous tax records, especially if you have received a refund.

You will also need to have a list of all of your expenses, broken down by month. Do not forget to include mortgage payments or rent, utility payments, insurance, groceries, vet bills, etc. This is where it will be handy to view your previous bank statements if available. Always include cash withdrawals from the ATM as well.

When you are researching your monthly outgo of funds, you also need to take the time to analyze each bit of spending you do. Then decide if it is truly a necessary expense or not. Also, consider ways that you may be able to cut down a certain expense. For example, if you have cable television, you know that it is not a necessity, but you and your family enjoy it. But do you watch all of those channels? If not, look into cutting down your cable package to the channels that you do enjoy, and spending a few less dollars each month. Little tasks such as this can lead to much more income that you expected, which you can put towards your bigger goals.

Once you have all of your financial information together, you are ready to create a budget. In order to do this, I suggest that you create a spreadsheet or use budgeting software. This will allow you to add in all of your account details including due dates. Software may also send you reminders when bills are due. You will need a place to add your creditor's information such as payment address and amount you owe. You will also need to have a way to distinguish bill types by fixed and variable. Meaning, can you pay off the debt completely or not. Enter in all of your income and outgo information. However, if you generally receive a tax refund, do not add this as income. I will talk more about this later.

Each time you pay your bills, make sure you record all of your information into your chosen software or database. This will help you to keep track of which bills you have paid and the current amount that you own on those bills that you can pay off entirely. You will also be able to have an overview of your current financial situation.

When adding your income and outgo information into your chosen system, do not forget about your financial objectives. Create a list of goals that you want to achieve and the time frame that you would like to achieve them. These goals may be larger items such as taking the family to Disneyland on vacation, or adding another vehicle to your household. However, you can also choose smaller goals as well, such as paying off the new computer you just purchased, or creating a $1,000 emergency fund. Whatever your goal is, assign a dollar amount to it and add it to your list of bills that you pay each month. This will help you to reach that goal for time that you chosen. Put this money into a separate savings account, preferably one that earns interest. You will be able to watch the funds in this account grow each month.

Earlier, I mentioned not to count your tax refund as income. Many people like to add this into the income portion of their budget. However, I suggest that you do not add anything to your income that is a variable. This will save you headaches in the end.

I also suggest that when you are doing your taxes each year you choose the right software that fits your individual needs. Because taxes can be tricky and the laws change each year, so it is good to have a solid software program that you can trust. There are several choices available, take a look at reviews on tax software to find one that will fit your needs.

So, when you do get that tax refund, you have the option of putting more money into reaching your goals, or you can add a bit extra to those fixed bills that you are paying off. Either way, the result will help you to reach your goals sooner and have the satisfaction that you were able to get what you wanted with a little bit of budgeting and hard work.

Creating a budget and sticking to it may seem difficult in the beginning, but keep in mind that you are working towards a goal. Keep this goal in mind as well; it will make pinching pennies come easier.