Going Forward: Reducing Your Living Expenses
As you go down this list of living expenses, you’re sure to be surprised. You probably were unaware of just how much some of life’s little pleasures are really costing you. Of course, you’ll want more than one month’s living expenses to use as a basis for figuring your budget. List your expenses for the past few months to get a better picture, and continue to record your living expenses for several months as you develop your budget. Reviewing your living expenses, you’ll see areas where you can reduce spending and increase your savings. You’ll also get a good idea of which expenses you can’t change.

Now make a copy of the blank monthly expense record, only this time label it "Budget." This is where you’ll fill in what you expect to spend in each category. Start by listing your constant living expenses. Housing costs and car payments, for example, typically don’t change from month to month. Then set reasonable limits on the items that fluctuate, such as food and clothing. The trick is living within those limits. Putting theory into practice can be difficult, especially if you’re not practiced at budgeting. Setting some goals will help you stick with the plan.

Reaching Your Goals
When it comes to spending money, human nature can cause you to be shortsighted. If you have money in your pocket and see something you like, the urge to buy can overpower your common sense. You need something to make the saving urge just as powerful as the spending urge. Remember those dream items you thought were out of financial reach? Those are the things to put on your list of savings goals. The important thing is to commit to paper just what you’re saving for, then keep the list handy for extra motivation.
 
Start with the following chart, personalized to reflect your goals. Prioritize every item on the list and assign each a time frame—whether it’s in weeks, months or years—to help gauge your progress in reducing your living expenses. 

SAVINGS GOALS