What You Need to Know

"Budget" is a dirty word to many people. It sounds restrictive and confining. But it doesn't have to be that way. Budgets can give you control over your financial life. Once you figure out where all your money is going, you can make sure that you're spending smart and not wasting. You can start to put some money toward the goals you really want to reach, such as that vacation to Disney World or the new deck for the house.

Many financial planners don't like the word "budget" because of its negative connotations. Instead, they call it a "savings and spending plan." It's a way to set financial priorities. But before you get to setting goals, you need to take stock of where you're spending your money today. To help you get started, check out our budget planner at the end of this story. Really give it a try -- it may open your eyes.

"When someone tries to lose weight, the more they track what they're eating and how much they exercise, the better they do,'' says Mary Jane Johnson, a certified financial planner with Horwitz & Associates in Morton, Il. "It's very easy to eat something unconsciously and it's very easy to spend money unconsciously. Be aware of the present and you can make proactive changes."

Planners say people are often surprised to see where their money is really going each month. The way to find out: either collect all your receipts from the past few months (and use your checkbook and credit card bills to help) or start saving your receipts for the next few months.