We all wish that money grew on trees, but since it doesn’t, a budget can help ensure you don’t overspend. Designing a budget is easy; sticking to it is another matter. Here are some tips:

Write It Down
Understanding where your money goes is the starting point. So gather your bank statements and credit card bills, and use a spreadsheet or financial program, such as Quicken or Microsoft Money, to document your expenses. Divide them into two categories: Fixed (rent, student loans, credit card minimum payments) and Discretionary (food, clothing, entertainment). For small cash expenses, spy on yourself for a week and write down each transaction. Then multiply by 4.3 for the monthly figure. How much you spend on nonessential things (those daily double lattes, for example) may surprise you.

Make Adjustments
Your take-home pay (net pay) should cover your fixed expenses with enough left over for discretionary spending and savings. If not, you have some hard decisions to make. Unplug the cable TV, get a roommate or contact your student loan provider about alternative payment plans.

Pay Yourself First
The Golden Rule of budgeting is this: Take care of your debt repayment and savings before anything else. Establish a fixed percentage of your income for this purpose. If you have credit card debt, pay off the card with the highest percentage rate first, and then the next highest and so on. At the same time, put some money aside in savings. If your company has a 401(k) plan with matching contributions, start there. Otherwise, consider an IRA. Or establish an emergency fund with enough for at least three months’ expenses. Got a raise? Add some or all of it to your savings.

Make It Automatic
Once you know what you absolutely must spend each month, consider paying your fixed expenses and your savings account automatically through your bank’s bill payment service or by a utility’s or creditor’s direct debit service. Out of sight, out of mind.

Give Yourself an Allowance
Take your monthly net pay, subtract savings and fixed expenses, and what’s left is spending money. Divide the monthly figure by 4.3 for your weekly allowance.

Cash Is King
If you can, only use credit cards for emergencies and use a debit card instead to track your expenses.

The bottom line? Create a realistic budget that fits the way you live. Too strict and you’ll be tempted to cheat. Too lenient, and you might find yourself in financial hot wate

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