Since you are computer savvy, you are using (or planning to purchase) one of the software programs that can be installed on your computer, and will allow you to interface with and download information from your financial institutions. Although there are some free or inexpensive programs available, they typically don't provide many features other than a basic ability to record and categorize expenses. If you want more features, including the ability to download information from your banking and credit card companies, then the two best-known, secure and reliable products are Intuit's Quicken or Microsoft's Money.

• Quicken Starter Edition 2008 - $29.99 - (impressive 60-day free trial) - if you want spending and savings tools, and to import existing Quicken data, you should upgrade to Quicken Deluxe - $59.99 (also has a 60-day free trial)
• Microsoft Money Essentials - $19.99 - (impressive 60-day free trial - check out the User Guide chapter on budgeting) - if you want to import data from previous Money or Quicken products, you should upgrade to Microsoft Money Plus Deluxe - $29.99 (also has a 60-day free trial - check out the User Guide chapter on budgeting)

As previously discussed, you will have to learn how to use the programs, create your expense categories, properly "tag" each of your expenses, and understand the results. Most importantly, you still have to track and correctly record your expense items that are not available from your bank and credit card companies. For example, even though the bank record will tell you that you got $300 over the month from the ATM machine, you need to record precisely how you spent that cash and then enter that information into the computer programs.

Especially for this initial exercise of tracking and recording every single expense for a month, we have found that most people do better with the manual method unless they are already using and familiar with Quicken or Money. If you already know how to use them, great! If you don't already use them, then you must consider whether it's worth the extra time and expense to purchase and learn the program. It might be beneficial to wait until you've learned the process of tracking, recording, and categorizing your expenses before you try to use one of the software applications.

Step 2 - Organize your expenses into categories