To budget, to have a budget and to be on a budget is not a bad thing; in fact, its just about the best financial situation you can find yourself in. A budget is a valuable financial management tool which will enable you to pay your monthly expenses, save a certain percentage of your income and control your expenditures.

How can you stay within in your monthly budget? There are several steps to making a budget.

1. The first step to making a budget is to gather information about your take home income and other sources if you have these (e.g. stock dividends). This allows you to determine what your true financial standing is. Be systematic; write down exact amount of your income and the other sources if you have them (e.g. stocks, dividends. Note the schedule you expect to receive these sources.

2. You need to understand what each and every bill or expense is intended for, in order to make an effective budget. List of your fixed and recurring expenses and the due dates for these expenses. Examples of these, weekly groceries, utilities, gasoline and mortgage or rental expenses.

3. Track all expenses, as these are not static. It will make your budget more efficient, when track these expenses on a regular basis, rather than once or twice a month. You can then see the variables and make the necessary changes in your budget to reflect this. Or address the reasons why.

4. Monitor the discretionary portion of your income. Where have you gone over budget? Too many cappuccinos at Starbucks? Or is it an unexpected medical or house repair bill? You could start a contingency fund in your budget to take care of unexpected bills.

5. Lastly, motivate yourself to save and to spend wisely. Set up short and long term goals. A short-term goal will enable to buy the latest plasma TV, or digital camera. Long term goals are ones that enable to increase your retirement funds or to buy real estate properties.

You can record the details of your budget, the expenses and sources of income in a 6-column ledger, or buy personal budgeting software, and encode these details herein.

Remember though, that in order for your budget to work you definitely need to spend less and save more.