Step one: create a budget. you can use a spreadsheet, budget software, online budget tools, or a pencil and paper. remember, to create a budget, you enter income and calculate the total, enter the expenses and calculate the total, and subtract the expenses from the income. step two: it is now the next month, may. the spencers have spent money and earned another month's worth of income. update your budget with the following expenses in may. keep the original expenses. expenses may short-term savings $0 long-term savings $0 rent/insurance $700 car payment $350 utilities $140 tv/cable $100 cell phones $100 clothing $230 entertainment/recreation/eating out $260 credit card (balance=$1200) $50 miscellaneous expenses $130 in what areas did the spencers overspend? what changes would you make to their spending? step three: you probably noticed that the spencer family is not putting money in their savings account. this would be a good idea since their financial goal is to buy a house. make adjustments to the budget so that they have money going into short-term savings.