The first thing to do is decide how you will divide your budget. The easiest way is to use something like the 60% rule. This means that 60% of your income goes to monthly expenses such as rent, utilities, phone and internet. The rest is broken up into 10% increments:
• 10% for your retirement fund
• 10% for long term savings or debt reduction
• 10% for short term savings
• 10% for fun money
The 10% for long term savings would be well placed in stocks or other long term investments. If you are in debt it would be better to use this portion to pay off your debt. The short term savings are for emergencies such as car repairs. You can also use it for home repairs, new appliances or gifts for special occasions. It is alright to spend this money that is what it is for. The last portion, 10% for fun, is meant to be spent on whatever you want with no guilt allowed.
It is a good idea to group your expenses into as few categories as possible. There is budgeting software available that will branch off into a million categories, but this is not necessary. Keeping it simple will help you stick to budgeting. Pay as many of your bills online as possible. If you can set it up so these bills come out automatically, even better. This goes for savings too. Every time you deposit a paycheck, have money routed into your savings account.
Once your bills are paid you should use cash for the rest. Have three envelopes; one for gas, groceries and fun. This way you always know exactly how much you have and there is no need to track. Once the money is gone it is gone. You can always transfer money from one envelope to another, but you will still know exactly how much is left. Leave your credit cards at home.
Multiple credit cards are a hassle and cost you a small fortune in interest, dump them. You can survive on one credit card; it is even possible to live without one. It sounds incredible, but it is true. Make sure that you are still spending a few minutes each week to keep stock of your finances. Even after you simplify this is still a necessity.