Knowing where your money is going is the first step in setting up a budget. Most people have only a vague idea of how their money is spent. Sure, you know roughly how much you pay for the big things - mortgage, car, utilities, etc. But do you really know how much you spend on the rest?
Up until recently, the most precise way to keep track of your money was through the use of financial management software like Quicken or Microsoft Money. These programs have long had the ability to accept downloads from your online banking providers and allow you to easily categorize all of your income and expenses.
The new generation of financial management products are available online. Destinations Credit Union now offers MoneyDesktop as part of its online banking platform. MoneyDesktop allows you to "aggregate" or collect information from all of your accounts at various financial institutions and investment houses. Other programs, such as Mint.com, can do the same type of thing. One drawback with Mint is that they don't affiliate with all financial institutions - especially smaller banks and credit unions.
Once you set up your accounts in the programs, you can easily categorize your spending and set up a budget. There are tools to help you prioritize and pay down your debt faster. You can even get notifications when you go over your budget.
Set a goal for yourself to get started on accounting for your spending and setting up a budget. Be specific about your goal - "I will log on to MoneyDesktop and set up my accounts by next week." or "I will have my budget in place by the end of next month."
Of course most of us would rather be doing something else (unless you're one of those accounting types who love their numbers!), but this is important. For more information, read my blog post on Patch.com, "Where Has All My Money Gone?"