Welcome to the 12 Days of Christmas – Personal Finance Style! Over the next two weeks, personal finance bloggers around the internet will be bringing you the 12 Days of Christmas with a financial twist! We hope you enjoy the series!

On the first day of Christmas, the bloggers brought to me….The Best Way to Manage Money! And what is that, you ask?

Spend less than you earn. If you master that principle, you will be well on your way to financial freedom. Begin by making a list of all your expenses.

First think about your fixed expenses, the things that don’t change from month to month. Include things like

• Housing (rent or mortgage)
• Car Payments
• Insurance Payments
• Prescription medications that you take on a regular basis

Basically include everything you pay a fixed amount for. Don’t forget irregular payments like your auto insurance policy that you renew every six months.

Then make a list of other necessary expenses, the things you need to buy every month, but are a bit more variable in nature. Include

• Food
• Entertainment
• Gas for your car
• Birthdays and Christmas

Double check your list to make sure you’ve included every possible expense. For the items, like insurance, that you only pay every six months, divide the number into 12 equal monthly payments. For irregular expenses like Christmas, figure out what you typically spend and then divide that number by 12 months. At this point you should have a pretty good idea of what you need to spend every month.

Then take a look at your income. What do you bring in every month? If it’s more than your expenses, you’re in good shape, and you’re already spending less than you earn.

If your income is less than your expenses, you need to cut some things out of your budget. Perhaps you can trim the grocery bill. Maybe it’s time to get rid of cable T.V. Do whatever you have to do to bring the amount of your expenses below your income.

If there’s no way you can bring your expenses below your income, it’s time to look at raising your income. Can you sell some stuff on eBay to pay off the credit cards? Do a little freelance work to make the budget stretch? Get creative. I know it’s not easy, and I’ve definitely been there. I am there now, actually.

In the last few months, since my husband lost his job as an advertising sales manager, he’s done janitorial work at night, freelance copywriting, board operation for a radio station, and work at a call center for Harry & David. It hasn’t been a lot of fun at times, but we’ve managed to avoid touching what’s left of our savings.

If you put your mind to it, most of the time you can find a way to spend less than you earn. And if you honestly can’t, then it’s time to accept some help until you can get back on your feet.

For more 12 Days of Christmas, visit:

• Day 2 – Two Guaranteed Ways to Financial Freedom – Credit Withdrawal
• Day 3 – Three Paid Credit Cards –DebtFREE-Revolution
• Day 4 – 4 Calling Tips – Plonkee Money
• Day 5 – 5 Golden Rules of Snowflaking – I’ve Paid for This Twice Already…
• Day 6 – 6 Streams of Income – Moolanomy
• Day 7 – 7 Tips When You’re Swimming (in debt) – Working for Financial Freedom
• Day 8 – 8 Maids a Milking – rocket finance
• Day 9 – 9 Financial Lessons – Cash Money Life
• Day 10 – 10 Creative Ways to Cut Up Your Credit Card –Gather Little by Little
• Day 11 – 11 Ways to Get paid (…for Pipers…) – Mrs. Micah
• Day 12 – 12 Frugal Things You Can Do This Week – BeingFrugal.net

Photo by Jeff Keen.