This week, we're looking at ways to get your finances in order. Today, we'll look at decreasing your expenses so that you can increase savings.

Take out the copy of your budget. Ideally, your budget should balance.  If you have money left at the end of the month, it should be in savings. Your budget should not be in deficit regularly.  That's the fast route to credit trouble and bankruptcy, spending more than you earn. (Of course, there will be some months you spend more, but those higher expenditure months should be offset by  frugal months where you save more than usual.)

For most people, a close examination of your spending will indicate places you can cut in order to increase your savings. It is likely to be different for everyone, depending on where your money goes. In the short term, it's generally difficult to save on the big things, like mortgage or rent or your electricity or gas bill. Yes, you could move to a smaller place or improve your insulation, but those are probably a little more drastic than you want to consider right now.

There are places where the cuts are a bit easier. Eating out is a big expense for many people. Cooking dinner at home or carrying your lunch to work can save more money than you think. Let's look at an example:  If you spend $8 a day on lunch, that's $40 a week. You can buy a loaf of bread and a pound of meat for about $10. Toss in a bag of baby carrots and you can still save $25 a week. That's  $100 a month — a pretty big increase with very little effort. You'd save even more if you made your lunches from dinner leftovers that might otherwise go to waste. 

Entertainment is another place to cut. Movies, concerts, evenings at the corner bar, and weekend jaunts could be reduced or even halted for a short time as a way to increase savings. The same goes for non-essential purchases of clothing, electronics, or the like.

You may also want to take a look at the little expenses that add up over time:  the premium cable channels you watch only on occasion, the cup of designer coffee in the morning or the late afternoon diet soda, the weekly manicure, the magazine picked up at the grocery store checkout because you're bored. You don't need to deprive yourself completely. You could cut back or alternate what you give up. For example, instead of buying coffee every day, you could make it your Wednesday treat. Or you could make the manicure biweekly. Or you could give up buying coffee this month and going to movies next month. 

If you are carrying credit card balances, reducing or eliminating them is a great way of saving money. There are very few legal investments that let you earn 18% a year — a pretty standard credit card interest rate. It makes more sense to pay off high-interest debt (especially when the interest isn't deductible) than it does to sock cash away in a 1.5% savings account. 

To start getting rid of your credit card balances, calculate how much extra you can save each month  and put that amount each month toward the balance on your highest interest card while making your usual payments on any other cards. Once that balance is paid off, go to the next highest interest, until you are credit card debt-free.

Of course, there's one very difficult step left.  While you are paying off these balances, you can't be adding to the balances. That means no credit cards. If you can't pay for it in cash, you can't buy it. It's hard, but you will get used to it. Having to pay cash will help you decide what you need to buy as opposed to what you want to buy. And that distinction may be the most important financial skill you ever learn.

Now, to turn to saving:

Deciding what you are saving for can make a big difference. It is easier to give things up if you are doing it for a reason.  When you want to make that unnecessary purchase or you don't want to bother packing a lunch, thinking about the ultimate goal may give you that last little bit of willpower.

As a reference, here are some basic kinds of savings you should think about building:

• The Emergency Fund:  This fund should have about six months' living expenses. (Look at your monthly budget and multiply by 6.) You only use this fund in real emergencies. Real emergencies are job loss, serious illness, like that.
• The Life Happens Fund: I borrowed this name from Michele Singletary. This fund (ideally, about $2,000) is what you use for big car repairs or when the fridge issues a death rattle. 
• Retirement: The younger you are, the more important it is to start saving. If you start saving $100 a month when you are 25, you will have over $150,000 at 65, even if you never increase your contribution (assuming 5% interest). Talk to your human resources department at work and take advantage of every vehicle they offer for retirement savings. Some vehicles avoid taxes now and some avoid taxes later. It's worth some serious study or a meeting with a fee-only financial planner to discuss what's best for you.
• Education:  College costs continue to rise at a faster rate than inflation and the debt burdens of graduates continue to grow. Financial institutions and states offer lots of ways to save for college expenses. Look to government-sponsored sites for a discussion of the options that isn't commercially motivated. Also, watch for the impact of savings on the availability of financial aid. Remember, retirement savings take priority over education savings. You can get loans for college, but not for retirement.

The key to any kind of saving is to make it as easy as possible. Set up an automatic deduction from your checking account at least once a month. If possible, make the deduction as often as you get paid. Make it hard to get at that money. It may be good to set up an online account. They tend to pay slightly better interest rates and, while they are easy enough to access when you need the money, it's a bit too much of a hassle to get the cash just because you feel like it.