This is the first step every person must take before doing anything else with personal finances. You need to know how much you bring home, and how much all of your bills are on a monthly basis.

The easiest part is to figure out how much your bring home pay is. Just take your pay stubs for a month, and hopefully you make the same thing every week, and add up a month’s worth of bring home, or net, pay. Gross won’t get it done, because at least 28% of that is gone to taxes already. If you get paid weekly, add up four weeks worth; every two weeks, add up two. Even if you don’t make the same amount each week, doing this will still give you an average of what your monthly net pay is.

Next, it’s time to look at bills. If you have Excel or any other spreadsheet program, this will be easier to do. If not, you can still get started, but it might make some of the future calculations I’d want you to make a little harder to do.

You’re going to have two columns. The first column is a list of every bill or expense you have. This includes mortgage or rent, credit cards, phone service, etc. It also includes an estimate of monthly food and gas bills. “Food” includes any other items you regularly buy, such as toothpaste, soap, etc.

The second column is where you’re going to put in the numbers. Be honest in what you spend, because you’ll only be hurting yourself if you’re not. Don’t put down $10 a week for gas if you know you’re putting in $30, or $25 for food when you know you’re spending $75. Don’t write down things such as entertainment; you don’t get to figure that into your budget just yet.

Total everything in the second column. That will be how much your expenses are for each month. Compare that figure to the figure you got for how much money you’re actually bringing home. If your bring home cash is higher, even just a little bit, that’s a good thing. It gives us something to work with. If it’s not, but it’s less than $400 difference, we still have something we can work with. If it’s higher than that, you might want to think about going to Consumer Credit Counseling, where they can work with some of your creditors, most specifically credit card companies, in getting you lower payments so that you’ll have some money for your personal needs. That will mean you’ll have to turn in your credit cards, but on your budget plan, you’re probably not going to be allowed to use your credit cards anyway.

This is the reality check you need before going further. I’m stopping here so you can do your calculations, and then have time to react to what you come up with. If you make more money, you can breathe a little easier in knowing you’re not all that bad. If you don’t, don’t panic, because it’s always best to know. More next time.