If you're the type of person who always has plenty of cash, knows exactly where every penny goes and never has trouble paying bills, skip this chapter. You're either too rich or too smart to need it.

For the rest of us, unfortunately, making -- and sticking to -- a budget is the elemental tool for ensuring that your money gets used the way you want it. And even if you're in the happy situation of having plenty of income, the homework involved in drawing up a budget can be instructive since you may find that you are spending more than you wish on items like music CDs, electronic gadgetry or restaurant meals.

Not that drawing up a budget is any barrel of laughs. On the contrary, it's pure drudgery enlivened only by the occasional anguish of staring your own foolish spending habits square in the face. In fact, one of the chief impediments to budgeting is that most people would rather not know how they really use their money. It's bad enough to learn this kind of information on your own. It's even worse when a spouse or significant other finds out, since it usually confirms his or her worst fears -- and provides new ammunition for future "discussions."

Take heart. However unwise you are about spending your money, others are likely to be just as foolish in their own way. That's why we encourage you to do the following exercises with any other adults who influence spending in your household. After all, without their participation, no plan that you formulate can be made to stick.

Moreover, the pain of budgeting comes mostly at the beginning. After you have a budget in place, and you've fine tuned it with a couple of months of actual spending, then tracking your expenditures becomes almost automatic. If your boss at work were to ask you for an analysis of the department's spending, you'd figure it out quickly enough. Budgeting your household should be approached in the same businesslike fashion. And there are a variety of ways that electronic tools -- including Money 101 -- can help make the process easier. So if you're willing to give it a try, click on ...

Next: Listing expenses