A lot of people are allergic to the word budget, and the mere mention of the word may give some the heebie-jeebies. It is common knowledge, however, that a budget is important; that is, if you want to have at least a decent financial situation. Creating a budget need not be that hard. You just need to be committed to taking down all the details that you can. Be prepared to deal with the nitty gritty. At the end of the day, it will be worth it.
Arm yourself with a pen and paper. Alternatively, pull up a spreadsheet on your computer.
The first thing you need to do is to write down all your sources of income. It is best to limit the scope of your budget to a month. If you have a regular job, take down your take home pay - the money after taxes are deducted. List down other sources of income, if any. Include bank accounts, investments, and the like. Get the total amount for the month.
The next thing that you ought to do is to list down all your monthly expenses. Start with the non-negotiables. These are the financial obligations that you absolutely must pay and are fixed. This includes rent or mortgage, insurance premiums, and car payments. Follow this list with your variable expenses. These are expenses which are still a regular part of your budget but may change in amount. Groceries, eating out, and the like fall under this category. Get the total amount for the month.
Now see how your spending compares to your income. Obviously, if your expenses exceed your income, then you have to make adjustments. The same thing applies if your expenses are dangerously close to your income.
A little sacrifice here and there, and you will be on the right track to financial health.