If you want to be wealthy, then saving and investing are the first steps to riches. But you can't save if you don't have a budget to track what you spend and to measure just how much you can set aside as savings.

Financial planners will tell you that one of the golden rules to boost your savings is the principle of "paying yourself first". That means treating savings as a form of budgeted expense, with money transferred into a separate savings vehicle where it can't be touched. The savings vehicle could be a high-interest bank account or maybe a managed fund's savings plan. Whichever you choose, the aim is to send your precious savings where they can be put to work rather than squandered.

But the real question is: how much can I save? The only way to discover that is to track down all your income, including salary, and all your expenses, not just mandatory expenses but also discretionary spending. That monitoring process is no easy task. While you may get paid on a regularly basis, and while many expenses are also regular, there are always unforeseen things like doctor bills, birthdays, accidents and so on, that can throw your planning out of whack. That's where a budget comes in.

Budgets aren't created overnight, and they are never perfectly formed. They are fine-tuned over months and years. For instance, heating bills peak in winter months, while water and cooling bills will spike in summer. Christmas is certain to hammer credit card payments particularly hard. Then there is the annual holiday - can you afford to take the big trip next month or do you need more time to set money aside? And other unforeseen events can punch a hole through the best plan.

Of course, before you start plotting your incomings and outgoings, it's handy to come to grips with the essential need to create a budget. Perhaps one of the best motivational web sites for modest savers wanting to become better DIY investors is US education web site The Motley Fool (www.fool.com). While the site is full of US jargon and investment situations, there is plenty of encouragement for any first-time investor or even a small-time saver seeking to do more with their money. The best place to start is to look at the Fool's School section, which examines savings plans and credit card debt as well as investing basics.

Having been inspired and motivated, it's time to set a modest budget regime in place. Luckily, budget tools have been progressively developed both on the internet and as software so you need not rely on mere pencil scratchings on the back of an envelope. Some of the tools are extremely sophisticated, such as Quicken's Personal Plus 2002 or Microsoft's Money, but even the simple Excel spreadsheet package on your PC is enough to do the trick.

The internet is a good place to find a rudimentary budget planner. Many banks and fund management outfits offer a simple budget planning tool/calculator on their web sites. St George Bank has a financial tool kit that can be downloaded from its site. It's nothing flash - just the bare essentials - in that it doesn't go into the depth that you might like to develop in your budget later on. But it will give you a good initial grounding in the areas you need to examine in order to identify what comes in and what goes out of your household.

The Fairfax interactive network, f2, also offers plenty of useful tips on budgeting and a budget planner at its online money resources site (www.moneymanager. com.au). Search under the Advice section for stories on why you need a budget, a step-by-step guide to gathering information, how to make your budget work and a very important examination on how and why so many budgets fail, including case studies.

And that's a crucial point. Budgets fail for a variety of reasons. Often they are too restrictive and bind you to an unreal vision of how you want your savings to grow. Others get blown out of the water by unforeseen events and are abandoned. And then there is the simple issue of discipline - budgets require constant attention. Not only do they need to be defined, you also need to constantly monitor and categorise your spending regularly. Miss a week or a month and it's hard to get back on track.

That's why the goal of saving should always be kept in perspective. What are you saving for, how much do you want to save and when do you want to achieve your goal? Both the Money Manager and the Personal Investor web site contain savings plan calculators so that you can forecast how quickly regular savings can grow into a sum big enough to invest elsewhere, or simply to stockpile into a large cash bucket.

Aside from using the simple budget planners found on bank and fund web sites, there are also downloadable files suitable for installing on your PC. The website Tucows (tucows.internex.net.au/business/ expman95.html) offers several downloadable software products from Shareware, at a cost of about $10-20, although another software outfit, Freeware, has a product, the Budgeteer, that costs nix and is rated "four cows" (ie, four stars). These files operate in the Windows environment. But choose carefully as some products may be better suited for US users rather than being tailored to the Australian environment.

ING's financial passages web site is also worthwhile for tracking down stories on how to better address saving and budgeting, including its "money beans" calculators, and you can install its "can o' beans" platform application for access to all of the calculators.

For those keen to use the Microsoft Excel program on their PC, but who don't want to go through the tedium of manually setting a budget up themselves, Zurich Financial Services has two downloadable budget programs. Zurich offers an annual budget planner and a detail budget planner, and both use Excel. There are also useful downloads from the Lonsdale Financial Group. It's also worthwhile to search the web for other download options.

If you want to really nail your budget down to the last cent, and track your investments as well as your income and spending, then buying a personal financial management software package may be the way to go. The two leading products are Microsoft's Money and Quicken's Personal and Personal Plus. The latter's 2002 version was reviewed in Personal Investor in December 2001. Money's standard 2000 version was roadtested last in July 2000.

The two programs use the data you input on your income, expenses and investments to build a profile of your personal finances. As each program learns more about you, it builds up a picture of your financial position and can automatically produce a budget based on your spending habits over time. Such things are useful for the implementation of program-guided debt reduction plans and summaries, in the form of reports and graphs, of where you stand as well as forecasts of account balances. As the programs become more sophisticated they can also make recommendations on how to save more.

Money is an attractive-looking program for newcomers. It is designed with the look and functionality of a web page. Wizards analyse your data and offer the services of various tools. Money also links direct to the Microsoft Network Money web site. Reports can include "Who's getting my money" and "How am I doing on my budget". Money falls down because it does not recognise the Australian dividend imputation or superannuation regimes - so trying to properly track dividends or superannuation contributions is made difficult.

Quicken must be considered the leader in the personal financial management software market here because, unlike Money, it has been tailored to the Australian market with a sound grasp of the dividend imputation and superannuation regimes. Last month Quicken unveiled its new 2002 product, which has been massively redesigned, taking some navigation tips from Money along the way. But be warned, Quicken has enormous depth. If you are going in to try Quicken for the first time the sheer scale and scope of its functions can be daunting and take considerable patience to navigate.

The best advice is to start off slowly. Quicken works by applying categories to your income and expenses, over time building up a picture of where your money comes and goes. Forget about using the budget until you have input a reasonable amount of data. That may be three months' worth, or even up to a years'.

Quicken then has an auto-budget function, allowing you to use that data to extrapolate a realistic document. Quicken does have a few quirks though - it likes to take bi-monthly, quarterly or other irregular bills and assign a month by month amount to be set aside to pay for those bills when they fall due, rather than just getting rid of them in the month they fall due. Quicken also has alerts to warn you of upcoming bills, a calendar function, a "save more" planner and cashflow forecasting. It also has a scheduled transaction function that is another handy reminder and it memorises past transactions. It also allows you to create savings goals and track their progress.

If the holiday season has melted your credit cards and the expenses of the vacation have mounted up, then it is time to come to grips with exactly what you do with your money, and how to do better.

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