If we can't save money now, what will become of us once we retire? Saving money is a basic necessity for personal finance security, but many Americans don't have any type of a savings plan. Without a savings goal and a plan to achieve it, there's no long term strategy in place nor any daily reminder of what we've obtained so far and what remains to be achieved.

The principle of saving money is to have more money than you spend. Since it's easy for all of us to spend faster than we can earn, self-control is the biggest factor in our ability to save.

Reminder: A savings account accrues interest. To see how much interest you can earn, use our free savings calculator.

How do you break the self-control barrier? One way is to 'pre-spend' the money in a positive manner.

Set short term and long term savings goals, like a down payment on a car or a home, or to save for retirement. Include the dollar amount and a time frame for achieving the goal. With this mindset, instead of 'saving' you feel more like you are 'spending' portions of your paycheck. Spend those amounts via a savings account; not your checking account.

As you put money into your savings account to achieve the pre-spend need, the deposits become more like 'spending' (pre-spending) than 'saving'.

But how do you get the money to pre-spend? If you don't have extra money left over (if you're spending as much as you make), you'll have to force 'spending' money on your savings account. Decide on a percentage of your paycheck to designate as savings, such as 10% which is easy to calculate. If you cannot save 10%, then cut it in half to 5%. For some people, starting at 5% is better in the long term because it is less painful and; once they see their savings building higher, then they are highly motivated to switch to 10% savings.

If you still cannot save, have your employer deduct a set amount from your paycheck each pay period and deposit it into your savings account automatically. This 'out of sight, out of mind' mentally works for many people.

Whenever you receive unexpected, extra money (lottery, bonuses, pay raises, tax refunds or unclaimed money, overtime pay, yard sales, etc), pre-spend it on your goal. Try to put all; or most of it, into your savings account.

What if something happens, like an emergency (medical bills, lawsuit, etc)? If you have to transfer funds from your savings account to your bank checking account, treat the withdrawal as an emergency loan. Set up a 're-payment' plan to repay the withdrawl, including monthly note and interest.

If you don't have a personal budget, start now with the help of our Free Personal Budget Software.

If you want to track expenses, use our Free Personal Finance Software. It's as easy as using a checkbook register!

Or; if you don't like using software, you can create a pen-and-paper budget. The problem with a pen-and-paper budget, is the time it takes to jot down every detail, whereas our software makes that task much, much easier.

If you want to create a pen-and-paper budget, here's how:

• Collect every possible financial statement (checking account statements, credit card statements, investment accounts, current utility bills, etc). The objective is to set a 'base-line' of income and expenses. 
• List all of your sources of income (pay stubs, rental income, hobby income, etc). If your income is a regular paycheck with taxes automatically deducted, then list the net (take home) income. If your paycheck is weekly, to convert it to a monthly income amount, multiple the weekly check times 4.33. If your paycheck is every-two-weeks, to convert it to a monthly total simply multiply the amount by 2.165. 
• Identify all monthly expenses. This is the hardest part, but you can easily list and track expenses with our Free Personal Finance Software. List all recurring as well as expected monthly expenses (such as mortgage/rent, auto loan, insurance, food, utilities, savings, entertainment, gas/travel, clothing, retirement, etc).

Now that you have the basic information for your personal budget, here's where you get into details:

 
• Divide expenses into two categories; Fixed and Variable.

Fixed expenses are those that stay relatively the same each month and are recurring, such as mortgage/rent, auto loan, cable, internet, credit card payments, etc. These are expenses that essentially never change in amount or and are recurring for a long term (at least one year).

Variable expenses are those that change from month to month and include items such as groceries, gasoline, entertainment, gifts, etc. This category is tough to keep up with using pen-and-paper, but will be important when making adjustments. To make this task easier, once again we recommend using our Personal Finance Software.

 
• Total your monthly income and monthly expenses. It's highly likely you will see that you calculated more expenses than the amount you earn. If so, you're like many Americans who use credit (credit cards and loans; including personal loans from family) to pay their bills, and who are steadily digging a deeper and deeper debt hole. But, if your totals reflect more income than expenses, you've got a head start towards successful planning. 
• Adjust your expenses and/or savings plan. Regardless of your standing (either high income, low expenses or low income and high expenses), here's where you adjust your budget.

If you make more money than you spend, you can prioritize the spare money to areas of your budget such as retirement planning or to pay off credit card balances to eliminate that debt faster.

If you are showing a higher expense column than income it means some major changes will have to be made. Examine your variable expenses to find areas to cut.

• Review your personal budget monthly. It is important to review your budget on a regular basis to make sure you are staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.

CreditFederal offers free software to help consumers manage money, calculate savings, estimate monthly loan payments and to create a budget. Visit our free financial software download center.