You certainly don't do it in Word, unless you want to write paragraph-long
descriptions of the budget items...
I suppose you could use Excel or the Works spreadsheet, whichever you may
have, but that will be a fair bit of trouble to set up.
I suggest buying one of the personal finance programs, such as Microsoft
Money or Intuit Quicken. The basic programs are quite inexpensive, and they
all include tools for setting up budgets and tracking expenses in
categories.
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