Track your spending. Over the course of a month, write down every cent you spend: what you spent in on and how much you spent. At the end of the month, review the list to see where your money is going. Your list will also provide you with different areas where you can cut back. (For example, $6 a day for coffee and a muffin adds up to over $1,000 over the course of a year.)
Develop a budget. A solid budget is one that includes all sources of income, living expenses, debt obligations, and savings. Be sure to also include all expense categories: fixed (mortgage/rent, auto loan, etc.), variable expenses (credit cards, entertainment, clothes, groceries, etc.), and periodic expenses (auto maintenance, property taxes, home repair, etc.)
Pay yourself first. When you sit down to pay your bills, first set aside money for retirement, college, investing, or whatever your savings goal may be, and then take care of everything else. The old saying that the only fixed quantity is time is as true as ever. You’ll never get more time to plan for retirement, college, etc.
Plan your budget to fit your lifestyle. As you put your budget together, be realistic about where you can save money. Cutting back on certain items is easier and more successful over the long term than cutting things out entirely. For instance, cutting back on buying lunch every day to buying lunch once or twice a week can really add up over time.
Make the most of “found” money. If get a check for your birthday, tax refund, or other windfalls or extra income, don’t spend it all at once. Instead, put 90% of it in the bank, use it to pay down credit balances, or put it toward some other saving or financial goal. Treat yourself to whatever you want with the remaining ten percent.