oney problems can be extremely stressful. They can cause family problems and create high levels of tension for everyone involved. Remember that you are not alone in this situation. Almost everyone faces financial difficulty at one time or another in their lives. This section will help you learn and develop good spending and budgeting techniques, as well as provide some resources that might be helpful to you in developing your own Spending Plan.

Establish Your Goals

The first step in developing a successful Spending Plan is establishing some realistic goals. It is important that these goals represent goals for the entire family, so you need to sit down and talk about this. Decide what your family's needs and wants are. Determine what your future goals are. Would you like to pay off the credit card, buy a new car or save for your child's education? Write down all of your wants and needs, including future desires.

After you have identified your goals, you should prioritize them. Ask yourself, what has to be done first and what can wait? Then assign each of your goals a number. It may look something like this:

1) Pay off credit card
2) Buy a new car
3) Take family on a vacation
4) Save for college education

Now that you have prioritized your goals, the next step is to classify whether each are short-term, intermediate or long term goals. Short term goals are those that you want to achieve within one year. Intermediate goals are those that you want to accomplish within 1 to 5 years. The long term goals are goals that you expect to accomplish in 5 years or more.

Your goals are now identified, prioritized and classified as to when you plan to accomplish them. Make sure that you have these written down and place them where you can see them regularly (the refrigerator door, for example). This will keep them fresh in your mind and serve as a reminder about your spending habits. Remember that these are your goals and you should try to stick to them. Keep in mind that as time goes by, situations change and there is a good possibility that your goals may change as well. If this happens, be flexible and change your list of goals to reflect the situational changes.

Identify Your Spendable Income

Now it is time to determine exactly how much money you have to spend each month. You do this by looking at all of your sources of income. Wages from all jobs, tips, interest, gifts, social security, retirement benefits, child support, alimony and public assistance all count and should be included when determining your spendable income. Write all of these sources and amounts down in order to keep yourself organized.

Identify Your Expenses

To develop a meaningful Spending Plan, you have to know exactly how your money is being spent. The best way to do this is to keep a detailed record of all your expenses for at least a month. Write down everything that you spend money on and how much you paid.

Next, separate these expenses into fixed, flexible and miscellaneous categories:

• Fixed expenses - expenses that are the same every month (rent, mortgage, car and insurance payments)
• Flexible expenses - expenses that you have some control over by determining how much you want to buy or spend (food, clothing, transportation, gas, electricity, telephone, water, maintenance, personal care and medical attention)
• Miscellaneous expenses - expenses that you might not really need (movies, eating out, magazines and CDs)

These expenses can be further categorized as daily, weekly, monthly, yearly or seasonal.

Seasonal expenses might include Christmas, Thanksgiving, birthdays, anniversaries or other holidays and occasions that are important to you and when you might typically spend money. Lastly, don't forget to set money aside for tax purposes!

Devise a Plan

Now that you know how much you earn and how much you spend each month, you can decide what to do with the money that remains. If you cut down on the miscellaneous expenses and put that money towards the top priority goals listed, you will begin to make progress on paying your debts. Keep your plan close at hand and remember to write down where you spend all of your money. If you keep track of this, it will encourage you to spend less on "the extras" and more on your priorities.