Today, I'll write about preparing a spending plan. Keeping track of your money and exactly where it goes is one of the hardest things to do. Credit cards, ATMs, checks, cash, debit cards -- these are all ways you can spend your money. So how do you keep track of where it's all going?

Unless you walk around with a notepad and a calculator, it's really hard to know where every penny goes. But there are several good ways to account for what you do with your money. In this section we'll take a look at how to communicate about money, how to track your spending habits, and how to create a good spending plan.

Keeping track of your own spending and finances is hard enough. But when you have a family it becomes even harder. You might have two or more sources of income, and multiple credit, checking, and savings accounts. And everyone has expenses.

Did you know that most couples argue more about money than anything else? Talking about money can be hard. But how you communicate about money is almost as important as how you spend money. Learning how to communicate can make managing your money matters a lot easier. Be objective and recognize there is no single, right way to manage the household's finances. Negotiation and compromise are vital to resolving any differences.

Do you ever feel like money just disappears out of your pocket? Usually it's just a matter of not keeping good track of your spending. If you track your spending habits, you can find, and maybe save, some of that "lost" money. So let's take a look at how to keep track of your spending.

To really see where your money is going, you'll need to monitor your spending for a full month. No tricks here. You just want to write down everything you spend. Whether you use cash, checks, or credit cards, be sure to record all of your spending.

Here's a sample Expense Chart you can use to help track down spending on a weekly basis. You can write down your daily purchases in a notepad, then transfer everything to this chart each evening. You can download a printable copy of this chart by clicking the link below. Use it to track your expenses for an entire month, to get a better picture of where all your money is really going.

Once you've tracked your spending for a month, organize the spending into categories. By sorting the expenses into categories, you'll be better able to see where you can cut expenses. Remember that every little bit adds up.

You'll probably find some surprises when you review your expenses. How much do you spend eating out? Are your top priorities really getting the money they need? Do you have any spending habits that surprise you?

Creating a spending plan shows you exactly how you spend your money. Once you know that, you can see where to make changes to help manage your finances.

There are four steps to creating an effective spending plan:

List your sources of income.
Calculate your monthly disposable income.
List your monthly expenses.
Calculate the difference between your income and your expenses.

Now let's look at each step individually.

First, you list your sources of income. There could be many that don't come to mind right away, so take your time and think carefully about all your sources of income. We've listed several common sources on the slide above to help get you started.

Next, you'll need to figure out your monthly disposable income. That's the money you have available for saving, spending and investing, after you subtract taxes from your gross monthly income. In the slide above, Jenny is paid every two weeks, so we multiply her bi-weekly take home salary by 26 to get her annual take home salary. We add in her bonus, then divide by 12 to get her monthly disposable income.

The next step is listing your monthly expenses. There are two types of expenses: fixed and variable. Fixed expenses usually don't change from month to month, but variable expenses, such as utility bills, do. Variable expenses may also include amounts for infrequent events, such as holiday or birthday gifts. If you put any money into savings each month, be sure to include that amount as an expense, too. Think of savings as a bill that you pay to yourself.

The final step is calculating the difference between your income and your expenses. First add up your net monthly income from step 2. Then figure your total monthly expenses from step 3. If your total income is more than your total expenses, you have a positive balance. If your total expenses are more than your total income, you have a negative balance. If you have a negative balance, you'll need to decrease your expenses, or increase your income. Otherwise, you will find yourself owing money that you don't have.

A good spending plan allows you to see where your money is going so you can pay your bills, cut expenses, and save and invest, without going into debt.

A good spending plan can also help you spot problems with your finances, help in Organizing Your Financial Records, and identify the warning signs of too much debt. Review the slide above for some of the common financial problems that can be revealed while working on your spending plan.

Let's recap this post: Spending plans can help you stick to and achieve your financial goals. They enable you to compare and track your income, and your fixed and variable expenses. Your spending plan helps you review your spending habits and determine if you're carrying too much debt.