Budgeting. Even the word screams BORING, right?

Well, it's not the most exciting thing in the world, but it is crucial to hitting your financial goals. If you assign a value to every dollar you bring in in a month (from fixed costs to flux costs to savings), you've given yourself a path to success.

So although setting up a budget isn't overly exciting, hitting your goals is. And you're much less likely to hit them without a budget.

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Budgeting can be the most important act for anyone looking to get better control of their finances.

With a budget, you establish

• exactly where your money is going
• how much you will be saving each month
• the right amount to spend in certain areas

Thankfully, Yodlee and other account aggregators make it simple to set how much money you want to spend and how much you should expect to spend in each category. And since you have already determined your fixed expenses and once-in-a-while fund, budgeting for these categories is simple.

How to Create a Budget in Yodlee

After you log in to Yodlee, click on "Spending Reports" and then "Set Budget Goals."

Now you see a page breaking down your expenses by category, with an open form next to each category where you can input your monthly amount.

First, go through and add in all of your fixed costs. Since you know how much they'll be, you can put in the specific amount it will cost and move on.

Next, scroll down to the "Income" section. Add in your Expected Monthly Income into the Paychecks/Salary field.

After that, go to the "Transfer" section. You'll use the "Transfer" category as your once-in-a-while fund. Input your monthly set-aside and click "Save Changes."

Setting Your Flux Spending Goals

In order to budget properly for your flux expenses, let's take a look at how you've been spending in the past.

If you categorized six months of your transactions, Yodlee will actually show your average monthly spending amount for each expense over the last half-year.

If you have fewer months categorized and a number of uncategorized transactions, head over to the "Expense Analysis" page (with the pie chart we saw yesterday) and select the time period you categorized.

Using this as a basis, you have a pretty good idea of how much you spend in each flux category per month.

But instead of making your goal equal to the average you spend in each category, decrease it by 10%. This gives you a goal to reach for to decrease your spending and increase your savings.

You don't have to fill out every category with a goal – if you don't have any kids, you wouldn't budget for Child/Dependent Expenses – but do as many as possible.

Some categories may be covered in your once-in-a-while fund, like Insurance or Taxes, so leave them blank; you've already accounted for them in Transfers.

How to Account for Savings

The last, and most important, goal to set in your budget is for savings.

But how can you start on your journey if you don't know where you're going?

Tomorrow, we'll determine what you need to save for and how much it's going to cost you.

TIP: Sticking to your budget requires a particular mindset; you have to want to stay within the limits you've set up. You're not just making up numbers to try and hit. With every penny you go over your budget, you have one less to save for your real goals.

There's two pieces to personal finance success: what you bring in and what you spend.

The most important (and extremely simple) equation for personal finance success is what you bring in – what you spend. If that number is positive, your net worth is growing. If it isn't, you're going in the wrong direction.

On Day 5 (below), it's time to figure out the first part of that equation — how much you're bringing in.

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As you've learned from looking at your net worth, there are two sides to your financial picture: how much you bring in and how much you spend.

Is it easier to have a higher net worth with a fat-cat salary? Absolutely. But you don't need to make a lot of money to save a lot of money. In fact, cutting your spending is almost always easier to do than waiting for your next salary increase at work.

For our purposes, your salary is the amount of money you have to use – and you'll use every penny of it.

Your Money is Going Somewhere

Too often, people will get their paycheck every 2 weeks, pay their bills, maybe move a little bit to their savings, and then move on.

The problem? This leaves your money sitting around, most likely in a low-yield checking account.

Budgeting experts will tell you to have every penny accounted for before the month starts. If you make $4165.72 per month, you will use $4165.72 that month; whether it's either going to pay a bill, invest for the future, save for the short-term, or go toward a debt.

In order to automate your finances fully, you need to know exactly how much money you'll be bringing in each month.

How to Calculate Your Monthly Income

Since the Automated Finances system works on a monthly basis, you need to calculate your total monthly intake. Your intake is the money you make after taxes, insurance and any other pre-tax deductions.

Generally, add up your income from the past 12 months and divide by 12. If you have a few months that are out of the normal range (say you're a tax consultant or work as Santa Claus during Christmas-time), drop those from the equation and divide by the leftover months.

If you're married or share your finances with someone else, add their expected monthly income to your total.

Got It; Now What?

Now that you have your expected monthly income, you know what you have to work with.

Every penny of that number will be doing something each month, and much of it will be done on its own.

TIP: Don't forget to add in other regular sources of income into your expected monthly total. This could be from side jobs or passive income you have. If it's irregular, use the freelancer method to determine an expected total.

It's time for Day 3 in the posting of Automatic Finances: 17 Days to Your Financial Freedom.

See the previous posts here: Introduction, Day 1 and Day 2.

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After everything you've done to organize your finances, it's time to take a look at where you stand.

Whatever your situation – whether your net worth is high, low, or even negative – remember that this is a starting point. You're at the beginning of a new stage in your financial journey, and from here on, everything is looking up.

Thankfully, finding your net worth using Yodlee (and nearly every other account aggregator) is easy, so the workload today is light.

First, before we find it, you need to know why it's important.

Your net worth is:

• the difference between your assets and debts
• a full picture of where you stand financially
• the best barometer to measure your financial success

Too often, our society places value in people with high incomes and just as high expenses. Celebrities and athletes may pull in multi-millionaire dollar salaries, but if they're spending all of it, their net worth isn't increasing.

Your net worth is dependent on how much you save and invest – not on how much you spend.

What's My Net Worth?

If you're using Yodlee, finding your net worth is as easy as a few clicks.

When you're logged in and looking at your Account Summary, click on the link that says "Net Worth Statement."

Your assets and liabilities will be listed and your net worth calculated.

Adding Offline Assets and Home Value

Since Yodlee is only looking at your financial accounts, it doesn't add in your offline assets to your net worth.

This would include:

• cars
• jewelry
• art
• collectibles
• anything else of significant value

Of course, what may be your biggest asset – your home – isn't included either.

Thankfully, Yodlee offers the option to add in these offline assets, including an estimated value of your home, in your net worth calculation. Using the "Quick Links" on the left-hand side of your Net Worth Statement, you can add in your offline assets and recalculate.

Is My Net Worth Up to Par?

Comparing your net worth to other people isn't an exact science, but we can do a little bit of calculation.

In their book, "The Millionaire Next Door," Thomas J. Stanley and William D. Danko researched the habits of millionaires (high net worth individuals) and established a calculator for determining a person's desired net worth.

They break the results down into three categories: Under Accumulator of Wealth (UAW), Average Accumulator of Wealth (AAW) and Prodigious Accumulator of Wealth (PAW).

To find where you stand, enter your information in the calculator at http://www.banksite.com/calc/wealth.

The Bias in Net Worth Calculations

There's one bias in the above net worth calculation that may affect you: how old you are. In his popular personal finance blog, The Simple Dollar, Trent Hamm explains why Stanley and Ditko's formula fails those under the age of 40:

The Millionaire Next Door has a strong anti-youth bias. Early in the book, the authors define a simple rule of thumb for estimating one’s net worth: multiply your age times your realized pretax annual household income from all non-inherited sources and divide by ten. Go on, do it yourself. …

In short, the book often ignores the sacrifices youth make early in their life in order to maximize their earning power later. The reason for this bias is in their sampling: everyone interviewed in the book is already well into middle age.

Hamm offers a more realistic formula for finding your target net worth if you're under the age of 40:

Target Net Worth = (Age – 27) X Annual Pre-Tax Income / 5

What Really Matters: Your Trends

As much as we may like comparing our net worths with calculators and our friends, there's a more important factor: the direction your net worth is going.

Now that you know your net worth, it's important that it starts trending up. Your net worth wants to get more positive, and you're going to make it happen.

We'll start that tomorrow.

TIP: When you're calculating the value of your offline assets and home, remember that prices will fluctuate. Your goods are only worth as much as someone else will pay for them.

As I mentioned yesterday, I'm giving away my ebook, Automatic Finances: 17 Days to Your Financial Freedom! Over the next two-and-a-half weeks, I'll be posting a chapter a day from the book for your consumption.

If you like what you've read, you can get yourself a PDF version of the ebook using the "buy now" link to share with your friends. If you don't, you don't have to buy it. (The ebook does have a 100% satisfaction guarantee, so I'd refund your money any way if you didn't like it.)

I won't use this same message every day, but you get the gist.

So, here's Day 1: Organize Your Finances.

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For many people, especially those who have been working, spending and saving for a long time, it's easy to get lost in the clutter of old bank receipts, 401(k) statements and credit card bills. You've probably got a stack – if not 10 stacks! – of them lying around, shoved in a shoebox or filed away in a drawer somewhere.

It's time to get them out.

Organizing your existing accounts and finances can be a laborious task, but it's crucial in order to establish your current situation. The goal for Day 1 is to find where your money currently is, close out any accounts you aren't using and start banking online.

Gather all the information on any financial account you have, including:

• checking
• savings
• credit cards
• mortgage
• loans (car, school, personal)
• 401(k)/403b
• IRA/Roth IRA
• any other investments or debts

If you've been receiving paper statements from your bank or credit union, find at least one copy for each account. If you manage the account online, make sure you have your identifying information, like account number and username/password.

Don't forget that you probably have multiple accounts in each group – 2 or 3 credit cards, the 401(k) from your last job, or a checking account you never closed. Make sure you get them all.

Organize it!

Once you have the information for all your accounts, it's time to get organized.

On a sheet of paper (or, in a text document on your computer), write down:

• the name and type of each account (ex. Bank of America, checking)
• the current balance (use a negative sign if it is a debt)
• how often it is used (daily, monthly, never)

This is your current balance sheet. While it's a little low-tech right now, you'll be blown away by it in just a few days.

Keep your balance sheet in a safe place. You'll only need it for a couple more days, but like with any financial information, you don't want the wrong eyes seeing it.

Close Down Inactive Accounts

Now it’s time to close any inactive accounts.

If you have a department store credit card from 1995 with no balance, close it. If you have a checking account with little to no cash in it, withdraw the money and close the account. Same thing with investment accounts; if you aren't using it, get rid of it.

By closing down your inactive accounts, you'll trim the fat on your financial picture and keep only the essential accounts open.

Your Master Checking Account

The Automatic Finances system requires one master checking account, where money can be deposited, bills can be paid from, and savings can be transferred out of.

One of your accounts needs to be low-fee (preferably no-fee) with no limits on the number of transactions.

If you don't have this account already, you need to set one up.

Enroll in Online Banking

If you're not already banking online, today will be a big step for you.

People have been banking online for years (the first systems were established in the 1980s, with the first bank to offer it to its members in the '90s), so you can feel comfortable doing it, too.

Using your balance sheet of accounts, determine which you already manage online. You should already have username and passwords for these accounts.

For the accounts you aren't currently managing online, it's time to start.

Since this process will be different for you than for anyone else, you're going to have to do a little bit of digging here.

To find out how to enroll in online banking or open a new account:

• Go to your bank's Web site (or Google their name to find their URL)
• Find the link to "Enroll" or "Register" or something similar
• Answer any questions and input your account information

If you're unable to enroll in their online banking program, you may have to call their toll-free 800 number to get set up. If you're setting up your master checking account, the process is likely to take a little longer than for other accounts.

When you enroll, you'll set up or receive a user name and password. Make sure you keep records of this!

After you set up your online banking account, do the same for:

• credit cards (if they are separate from your bank)
• loans
• 401(k) or other retirement account

(You may have to get some information from your human resources manager about accessing your work-related retirement accounts online.)

Where to Store Your Username and Passwords

Now that you have username and password information for all of your accounts, it's important that you keep them safe.

Without question, don't give them out to anyone. Any email you get requesting them (or other personal information, like your Social Security number) should be immediately disregarded.

When you're on the phone discussing your accounts, be sure you know whom you are speaking to. Use common sense: never tell your personal information to someone who calls you.

If you have a tendency to forget usernames and passwords, there are a number of secure programs you can use to store them on your computer. Head to lifehacker.com and do a search for "store passwords" and you'll find some good advice about which ones to use.

A Word on Security

When you're banking online, you should always be aware of:

• what site you are on (make sure it's the actual bank site)
• the security measures they use (check your browser for a site verification from companies like VeriSign)
• your computer's vulnerability (make sure you are free of viruses, spyware and other malware)

Believe it or not, doing all of your banking online actually reduces your chance of identity theft, according to James Van Dyke, founder of Javelin Strategy & Research.

To find out more, the FDIC (Federal Deposit Insurance Corporation) provides tips for safe online banking.

You're Already On Your Way!

Believe it or not, getting a handle on your accounts can be the biggest step toward reaching your goals.

Money has a way of overwhelming people, and being buried in statements doesn't help. It's almost impossible to avoid having at least 6 or 7 accounts, so by taking the time today to organize your finances and enroll in online banking, you've already made great progress!

Enjoy the rest of today. You’ve earned it!

TIP: While getting together the paperwork for all of these accounts might be a pain, in 16 days you'll never get a paper statement again (and might save money doing it). Sounds great, right? Keep up the great work, and you'll be there before you know it.

It's January, which means it's time for New Year's Resolutions (that you won't keep), suggestions on where to invest your money this year, and plenty of predictions for the state of the economy — both Wall Street and Main Street.

While the media and blogosphere churn out stories about what to do in 2011, do yourself a favor: don't listen to it.

Don't worry about the unemployment predictions for the year.

Don't worry about a list of financial resolutions some editor in New York has put together for you.

Don't worry about what stock market experts say you should be investing in.

The only advice you need to listen to is the advice appropriate to your place on your financial journey — and that advice has nothing to do with 2011.

Are you in debt? Focus on working hard and attacking the debt.

Need to build your emergency fund? Start automating your savings and pay yourself first.

Haven't started saving for retirement? Contact your HR department to enroll in your 401(k) or open a Roth IRA today.

The path to financial success stays the same no matter what year it is.

Work hard, pay yourself first and automate your finances to keep on track.

Focus on Action, Not Reaction

Any successful person will tell you that winning is about making things happen — not responding and reacting to life.

If you're constantly looking for direction based on external forces — the economy, your job, the media — you will always be less successful than if you take the initiative and make things happen.

Take positive action today. You can make 2011 your best year ever, but only if you're in the driver's seat.

Further reading:
How to Take Control of Your Finances in 2011 – Get Rich Slowly

P.S. One of the reasons this blog was so quiet during the later half of 2010 was that I was out making it my best year ever. You can do the same. I know it.

You've certainly heard about the benefits of credit unions before, but tell me something … would Bank of America ever send you a check for $125 just for being a member?

That's what my credit union just did, and I wasn't the only one who got one.

I certainly have contributed to their success (my mortgage is there), but come on – this is why credit unions are great. Profits don't go to line the pockets of fat cats — they go back to the members and the institution.

Maybe you can learn something about personal finance from celebrities.

In preparation for his upcoming film Wall Street 2: Money Never Sleeps, Shia LaBeouf is claiming that he put $20,000 into a Schwab online trading account and traded his way to $489,000.

(I?m not going to say that he didn?t do it, but if he did, he?s wasting his time working in Hollywood.)

But just recently, tech sector finance blog Silicon Alley Insider ran a post called Bono Named ?The Worst Investor In America."

So what can we learn from this?  Well, there's an upside to everything — you just need to look at it from the right angle.

Signal vs. Noise

When you're making investing decisions, it?s important to filter the signal from the noise.

But advice from celebrities, as a matter of course, isn't always noise. In fact, some of it can be a valuable bellwether when making investment decisions.

One of the axioms I follow is that everything a celebrity says about finance is wrong.

Think of the statements they make as valuable contrarian indicators. Listen to what the say, and then do the opposite.

A perfect example of this is people who trade against Jim Cramer?s Mad Money picks. Cramer is famous for being so disastrously wrong on so many occasions that going counter to his picks seems like a tidy proposition.

It's a Great Plan, Until it Isn't

Bear in mind, however, that nothing in investing or trading is perfect.

It?s often said that ?Investment theses work great?until they don?t.? My goal here isn?t to offer financial advice per se, but to share my approach to how I interpret market signals, depending on the source they?re coming from.

There's always an upside, even when on the surface it looks like useless noise.

Believe it or not, we're nearly 25% done with 2010 — a quarter of the year has come and just about gone.

It's crazy how time flies.

It's also about that time when you realize that, if you're going to succeed in your financial goals this year, you need to keep yourself on the right track and push even harder forward.

If you're looking to make this the year you get out of debt, or fully fund your 401(k), or get your emergency fund up to 6 months, or track every dollar you spend, it's time for a financial check up.

How are you really doing?

• Are you really on track to pay off your debts when you'd hoped?
• Have you automated your finances like you said you would?
• You're not dipping into your savings for everyday expenses, right?

If you made a New Year's financial resolution, then it's time to take a long, hard look in the mirror and see if you're doing the things you wanted to do.

If you are, great! If the answer is no, what happened?

Don't be discouraged that you fell off the track. It's okay; it happens to everyone. You just need to get back on.

This is one of the reasons I talk nonstop about automating your finances. When your money is set on autopilot, your savings builds automatically, your debts get paid off on their own, and your spending tracks itself.

But you need to get the ball rolling. Your finances aren't going to fix themselves.

So, how are you really doing so far this year? Tell us in the comments. I'm going to add mine, too.

P.S. I mentioned last week that I was thinking about raising the price of Automatic Finances from $7 to $17 thanks to sales jumps, and today, I'm going to make it official. It won't increase until April 15 (tax day), so to save yourself $10, get your copy now.

A powerful video about doing the right thing — and the state of our financial system today.

Watch it and then share your thoughts in a comment below.

The recent look inside Robert Kiyosaki's wealth seminars generated an interesting discussion in the comments about personal finance pundits and whether they ever have your best interests at heart.

It's a great question, since most pundits made their money telling people how to get rich — reason enough to raise an eyebrow and wonder if their advice really works for you and me.

So, let's take a look at some of the biggest names in personal finance and see if they can really be trusted.

While there are a ton of commentators and money gurus on TV and radio, let's discuss a few of them: Suze Orman, Dave Ramsey, Jim Cramer and Robert Kiyosaki.

For argument's sake, let's assume that each one of these pundits believes that they have your best interests at heart.

Meaning, they shell out personal finance advice that they believe works for everyone who is listening — not just what worked for them or their "great idea" about making money.

While I doubt that this is true in every case, it's worth giving them the benefit of the doubt.

But one crucial thing to remember is that all of these pundits are also storytellers — meaning, through their books, TV shows and radio shows, they need to create a compelling, interesting story that keeps people reading, listening, and buying books and other products.

That's why phrases like "in this economy" permeate the media — the storyline needs to be established so you, the consumer, understand why you need to do what you need to do.

But at the end of the day, each of these pundits is also in sales; without selling you on their products or their sponsor's products, they wouldn't be on the air.

I want to open this up for discussion. Can you really trust any personal finance pundit? Does their need to stay on the air and sell books make their advice less trustworthy?

Tell me what you think in the comments.