Before you can figure out how to save, you need to know where things stand now.  That means you need to know your monthly income and expenses.

To calculate your income, look at your take home pay after deductions for taxes, health insurance premiums.  If you have automatic deductions for retirement or other savings, those can be listed as both income and expense so they balance out.  If you have regular extra income (from overtime, annual bonuses, etc.), you can include them.

To calculate your expenses, you need to be thorough and honest.  You need to list everything you spend each month.  Major expenses (mortgage or rent, car payment, etc.) are usually easy to calculate.  I recommending gathering all of your bills for about 6 months (or downloading the data from your online bill pays) and using that as your basis.  You also need to track your cash expenditures for at least two weeks.  Try to get as complete a picture as possible.

Once you know how much you make and how much you spend, you're ready to move on to saving step 3.  We'll discuss that tomorrow.