Have you ever been a one-day millionaire? After getting your monthly salary, you feel so rich that you eat at a posh restaurant and order the finest wine. Then you head to the mall and treat yourself with a new top or stilettos because you feel you deserve it for a job well done. Fast forward to just a week before your scheduled salary and you feel like a pauper, so you borrow cash from your friend and promise to pay back once you have money.

If this hideous cycle will play on repeat, you certainly won’t like the ending: maybe you’ll end up working for the rest of your life even when you can no longer walk only because you don’t have any savings at all. You also can’t make big purchases since you can’t set aside any amount because you basically have nothing left by the end of the month.

That is why you should know how to budget your money. If you don’t have one, you are not alone. Around 60 percent of Americans are also in the same shoes are yours, a Credit.com survey showed. One of the reasons is that people don’t actually know how to make it, but it’s not that hard as far as The Budgetnista founder, Tiffany Aliche, is concerned.

Making a List

Check previous bank statements for reference

First, you need to track your monthly expenses. List down all the things that you shell out money for, like the fixed ones (such as the rent/mortgage, loans, and bills) and the flexible ones (food, gas, and groceries).

By putting all these cards on the table, you would know the factors that gobble up your earnings. If you find it hard to remember what you usually spend on, check your past bank and credit card statements and organize these for easier monitoring.

Analyze the Money Involved

Auto loan and mortgage are fixed expenses

Once you have itemized your expenses, you should know how much goes into each factor. For fixed expenses like a car loan or mortgage, this is easy since you pay the same amount every month. However, for variable expenses, then you need to compute for the average. For example, your water bill is $90, which is due after three months. Divide that figure into three and that will bring you $30 per month.

Now if you hate math or can’t decipher if the expenses are fixed or not, there are a lot of applications readily available on your smartphones to help you. There’s no excuse for neglecting this task.

Do the Math

Calculate the expenses and subtract from your earnings

This is the part that needs a little more effort. Calculate how much all the expenses are and subtract the sum from your monthly earnings. If the result is negative, then that only means you are always financially short -- you need to slow down or even totally cut spending.

If you see a positive figure, this means you have an amount that’s left of your monthly salary – however, if you don’t feel it now, then it may be because of unaccounted-for splurges.