The first step to budgeting is to determine how long your severance payments will last. Determine fixed costs, such as rent, car payments, insurance, etc. You might also want to track expenses closely for at least a month to figure out where your money is going. By determining spending patterns, you can pinpoint solutions for a tighter budget. The following tips will help you become more financially sound:

• Take up the challenge of money management. Attitude is crucial. If you're married, talk it over with your spouse. Try to reach consensus of the importance of cutting back. This is crucial, because your success will require some sacrifice, and that means cooperation from other members of your family.
• Plot your position. Create a balance sheet with income on one side and all expenses on the other. Determine what your monthly expenses are.
• Set up a budget that enables you to manage your expenses each month. Keep it simple and practical.
• Distinguish between necessities and luxuries. Many of us have begun to believe we can't possibly live without dinner out twice a week or two new video games a month for the kids. Make a list of luxuries, then bite the bullet and cut that list in half. (Even if you cheat a little, you're moving in the right direction.) If nothing else, postpone all optional major expenditures for the next three months. Example: Eliminate one $50 dinner out each week. That gives you $2,600 more in a year!
• Practice the virtue of frugality with pride. Find ways to have fun without spending money — a day at the beach versus shopping at the mall; a walk in the park versus going to a movie. Plus, don't be afraid to shop around for the best price. Make it a game. See how much you can save. Then stick that amount into the "Wild Weekend" jar in the kitchen. (After all, you have to have some fun, right?)
• Do not liquidate investments or lapse insurance coverage. These can protect you for the long term and help guarantee your future.

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