Have you ever counted the change in your pockets and wondered why you didn't have more money? Maybe you thought you had enough money to buy an ice cream cone. Or you remembered you needed to save a dollar for a special lunchtime treat. Instead the money you thought you had is gone. You ask yourself a question familiar to many other kids and adults, "where did my money go?"

Managing your money - a first step
Understanding where your money goes is one of the first steps in learning how to manage your money. Try writing down your income (or earnings) and expenses for a week. You can use a small notebook and write each day's income and expenses on a separate page. You may want to divide each page in half by drawing a line. It doesn't matter if you divide the page horizontally or vertically. Write "Income" on one side and "Expenses" on the other. Income is money that you either earn from a job or receive as a gift. Under "Income," write down the money you received that day, like an allowance or a check from your grandparents. Other types of income include money you earn from a part-time job, like walking a neighbor's dog or babysitting. Under "Expenses," list the things you buy each day. If you pay for lunch, you should write it here. Buy a comic book or a candy bar? Write it down. You should also include under "expenses" any money you give to a church or charity. At the end of the week, add up all the money in the "Income" sections. Then add up all your expenses for that week. Now subtract your expenses from your total income. At the end of one week, did you spend or save most of your money?

I spent a little or I spent a lot! What does it mean?
The purpose of writing down your income and expenses is to help you understand where your money goes, so you can make smarter spending decisions. Looking back at how you spent your money, you may be surprised to find out how much money you're spending on candy, pens or other small items. For example, let's say that you want to save for something special, like a CD player, a movie on DVD or a bike, but week after week you never seem to get any closer to your goal. By knowing how you are spending your money, you may find that you are willing to spend less on small items, so that you can put that money toward the larger-priced item you're saving for. It may help you get the item sooner.

I've kept a record for a week. Is that enough?
Just keeping track of your expenses for one week may not be enough to give you a picture of how you are spending your money. For example, you might spend more money on school supplies in the beginning of your school year than at the end of the year. There may be certain times during the year when you spend more on baseball cards or ice cream cones. Try keeping a record of your expenses for a different week every month. For example, you may write down your income and expenses the first week of January, then again the second week of February and the third week of March. Keeping a record at different times during the year might help you discover any patterns associated with your spending. Or it may help you identify those times when you need to plan for extra expenses, like birthday presents.

The next step
After you have kept a record of your money for a few weeks, next try creating a budget and following it. Think of a budget as a plan that both lists the money you expect to earn and details how you might spend it. To learn more about creating a budget, read our article, "Budgeting: Your Tool to Balance Saving and Spending." (For an example of a budget sheet, click here. When you create your own budget, use categories that make sense to you.) Once you have a budget, follow it for a month. Keep track of your income and expenses during the month. Then, at the end of the month, compare the actual amounts you spent with the budgeted amounts. Maybe you followed your budget exactly. Maybe you underestimated your expenses or had unexpected expenses. You may discover at the end of the month that you spent less money on certain items than you thought you would. The next step? Revise your budget and follow it for another month. Budgeting is not about how much or how little you spend. Budgeting is about understanding where you spend your money. And, when you have a savings goal, budgeting is about making decisions that will help you reach your savings goal. Learning to manage your money, through budgeting and keeping records, will help you make decisions about your money that are right for you.