Budgeting can be a very difficult task, but it is critically important if we want to attain financial freedom. Understanding where our money comes from, and more importantly where it is going, is the first steps towards making sure that we spend less than we make.

There are many different ways to budget, and most of them work pretty well. The most important step is deciding you are going to make a budget and stick to it. Some people prefer to put cash in jars or envelopes at the beginning of each month for each spending category, and when the money runs out they can't spend any more money. Some people use spreadsheets or ledgers to track money going in and out. Others you special budgeting software on their computers to help them track their expenses. Once you've picked a method, learn all you can about it, then follow it as closely as possible.

For many people it helps to have a goal for you budget. Budgeting can be difficult, tedious, and frustrating, so having some dream or goal to keep you motivated can be invaluable. For some people it is getting out of debt, for others it is saving for retirement, and for others it is saving for their children's college. Whatever the goal, make sure it is always on your mind, so that you can remember why your trying to control and understand your spending.

The first step in your budget is to see where all of you money is going. You should start by tracking your normal spending for 2-4 weeks. This will help you understand where you money is going and where you might be able to cut back. You might be surprised at the end where your money ends up. That daily trip to the coffee shop or the snacks from the vending machine at work may not seem like much, but over time they can add up to quite a bit.

Once you see where the money is going, you need to make the hard decisions about where you can or should cut back. Most of these changes will be hard, but they will pay off. Cutting your restaurant expenses by half can save you a lot of money, but you might need to eat at home more often. Eliminating unnecessary expenses can also be very powerful. You just need to remember that the more you are able to cut, the sooner you will be able to reach that goal you have in mind.

One you've come up with a budget, stick to it! Once you see all of the money you can have left over at the end of the month, hopefully you will be able to keep working hard and spending your money appropriately. Once you reach your goal, don't let your budget fall apart. If you we're paying off your debt, then start saving for retirement. If you we're trying to save up for juniors college education, then starting saving for yourself so you can have a better life.

There are also tools and systems you can use to track your budget. One that is free and very helpful is mint.com. It offers many basic budgeting and tracking features, and does it all for free.