By Elizabeth Fenner
Updated February 07, 2008
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| Credit: Frederic LaGrange

If you find yourself consistently short of money or you never seem to have enough funds for a vacation, a budget can help. A budget is simply a plan for how to spend your money. It doesn't have to be fancy. In fact, the key to sticking to one is to make sure it's both realistic and simple, says Jeffrey Pritchard, a financial planner in Beaumont, Texas, who writes the blog allfinancialmatters.com.

Do Right Now:

Grab a blank notebook. Write down everything you spent money on today, from the utility bill you paid by check to the bus ride you paid for with cash. Do the same thing tomorrow, and so on, for a full month. "That's the only way you'll know where your money is going," says Pritchard.

Next Steps:

Take stock. At the end of the month, create basic categories―like food, clothing, shelter, and savings―then allocate your expenses accordingly. (If you're computer-savvy, putting them into a simple Excel spreadsheet can make the math easy.) If you know you have certain areas of weakness, like eating out, break those out in more detail (restaurant meals, breakfast at a coffee shop, etc.).

Play with the numbers. Now that you know how much money you spend each month, you can divide it in ways that are more satisfying. For example, if you want to have more to spend on cultural events (like plays and concerts), maybe you are willing to forgo hair coloring at the salon. You should end up with a list of all your expenses and how much you would like to spend on them each month. Use this as a guideline for future spending.

Sign up for an online money-tracking program, like wesabe.com or mint.com. If you do your banking online, you simply link one of the programs to your bank and credit-card accounts and the program automatically grabs your spending activity from those sources and categorizes it for you. For example, if you put $125 worth of groceries from Whole Foods on a credit card, mint.com or wesabe.com records that in the food category. Then you can check your actual spending against your budgeted spending whenever you want, without having to save scraps of paper and enter the information by hand. However, you do have to remember to enter cash transactions. These programs can see that you made an ATM withdrawal, but not what you spent the money on, making them best for people who use debit or credit cards more frequently than cash.