An extra dinner here, a new t-shirt there, a new CD once in a while and suddenly the end of your money comes before the end of the month. It is okay, and even important, to have some fun and buy yourself a few treats, but if you are spending so much on luxuries that you aren’t able to save for a rainy day or even pay your bills then you have a problem.

The easiest way to solve this problem and to get your personal finances back under control is to keep a budget. By breaking down your monthly expenses, writing them down, setting goals and then making sure that you meet them, you will find yourself enjoying much better financial health.

The key first step to setting a budget is to figure out exactly how much money you have every month. How much do you make from your job? (Be sure to count your after-tax amount, not your gross income) Do you have a consistent source of side income? Investment income? Figure out all the income you have and what it amounts to.

Next you have to sit down and identify all of your fixed, recurring costs. What do you pay in rent? Mortgage? Heat, lights, water, electricity? Insurance? Car payment? Loan or credit card payments? Bus pass? Telephone? Anything that you have to pay every month in order to live. You will have to pay those expenses every month no matter what, so you have to accurately account for them.

Because those costs occur every month a great way to deal with them is to have as many of them deducted from your bank account automatically as you can. That way you aren’t tempted to spend the money on something else and you won’t forget to pay a bill.

Finally, figure out how much money you will have left over and determine how you want to allocate it. You will need to buy food and clothes. You will need to save for the future. You will need to have some fun. Divide the remaining money among the categories that you determine, being sure to leave a little bit of a cushion for unexpected price increases or expenses. Also, you want to be sure that you have set realistic amounts. You can’t, for example, say you are going to spend less money on food than it costs to buy a months worth of food. If your targets are impossible then you are guaranteed to fail.

Once you have a reasonable budget set you have a goal. Make sure that you are working hard and paying attention so that you can meet your goals. You will be surprised what a difference it makes.

If for any reason you are struggling to keep up with your monthly financial commitments and are creeping into debt, it may be a time to consider alternative actions such as using a credit counselling service or even a debt management company like These services can help you pay off debt and can even help save money by reducing any interest and getting rid of any late payment fees.