For me, it was first to identify all of my/our expenses. Amazing what amount of money can flow through one's hands. Compare income to that expense, and you kn

For me, it was first to identify all of my/our expenses. Amazing what amount of money can flow through one's hands. Compare income to that expense, and you know if you are positive or negative. To go from negative to positive, or to set aside "fun" money, I decide if any of those items could be dropped or paid off sooner, rather than later. This is also a basis for allocating an amount to stash for savings - I like to have between 6 months and 1 year's living expenses set aside - You never know what's going to happen, and I feel so much more secure. Once the safety net goal is reached, that same amount, when not directed to fun experiences, can also be directed at retirement/investment income. If you've ever played the game of Cashflow (Robert Kiyosaki) you come away with the notion of having passive assets generating enough cashflow to cover your expenses - Very powerful idea.