Knowing where you are spending is the first step to saving. Unfortunately, most people do not know exactly how much and where do they spend their income every month. So if you are one amongst them, don't worry, there is always a first time. It will take some effort to get started, but let us assure you, even if you do it for 3 months, you will learn immensely useful insights about your spending pattern that will give you valuable lessons for a lifetime. 

For some people, a simple rule of Income - Saving = Expense works wonders. All you have to do is first decide that how much money are you going to compulsorily save every month and put it aside as saving in the beginning of the month. The remaining money is available for expense which you can track and categorize intro three parts: Living Expense (Needs), Optional Expense (Wants) and Luxury Expense (Desires). 

Extra: Keeping track of your monthly income and expense allows you to make sure that your money is being put to its best use. For example, if you knew how much money you were spending on going to the multiplex and eating out every month, you might decide that you'd rather reduce some of that expense by watching a few movies on a DVD with friends and cooking at home. The money saved can be used for something more useful, or even if it is to be spent on leisure, then you can save that money for a nice vacation.