Today really isn't that much different than at any other time in history. By that I mean that each individual person has always had the responsibility for their financial position, and ultimately no one can spend more than they make. What is different today, is that the banks have run an incredibly successful campaign to get everyone in as much debt as they can possibly stand. This is great for the banks, as they make money from all the interest on those credit cards, equity, and other oversized loans. Sure a few people default here and there, but this is a very small price for the banks to pay, as we see today how they pass those expenses on to other unsuspecting people, businesses, and now even our government.
On top of the banks, there are all those other businesses that beg for a part of your paycheck as well. Just think; before 1960 there were no cell phone bills, no cable / satellite TV bills, no internet bills, no home security monitoring bills, no prepaid legal bills, no Identity Theft protection bills. Today there are so many businesses that have sold themselves as necessities, that you feel guilty and vulnerable if you don't subscribe to their services.
The problem comes down to the very basics; how do you manage all those bills? They all come in at different times of the month and for different amounts. It's now impossible for you to look at your checkbook and know, for sure, just how much you can spend today ... or tomorrow. You really have no idea how much you need to keep in your account to pay for all your bills.
In the far back corner of your mind, you may know that you should do a budget. But you either don't know how to do a budget, or you've done it before ...
So how does a person, or family, survive today? First, you have to do what I call an Easy Budget of "Where you are right now." Not a budget of "Where you want to be" or "Where you think you should be." And, certainly not a budget of how much you spend in the vending machine at work. What is needed is a simple, easy budget of ALL of your current known bills. If you don't know how much they were for ... guess. A guess is a lot better than nothing. A high guess is even better.
Because most people are paid weekly or every 2 weeks, and most bills come in every month, and most months are not divided into weeks, your budget needs to be done from a yearly standpoint. Add up all your electric bills for the last year and enter the yearly value onto your budget. Do the same for all of your bills, and income sources.
Try to add in those known expenses that don't really appear as a bill, like Christmas gifts, birthday gifts, future vacations. Plan some for car repair (you know it's going to happen .. plan for it)
When finished, subtract all of your known bills from your known income. The result is how much you have left over to do your Daily Living for the next year. That's right the leftover is what You get to live on. When you signed up for cell phone service, you agreed to pay the bills. You have an obligation to pay that bill, and it will effect how much you can spend on other things.
Now that you know how much you have for your Daily Living, for the whole next year, find out how much you can spend each week. Divide your Daily Living by 52.
This gives you a weekly -maximum- amount that you should be able to spend without getting into trouble.
Most people find that they have to cut back. This is because you're now planning how to live instead of reacting to the amount in your checkbook. Most people cut back a lot when large bills come in, and sometimes it hurts a lot. My method makes you cut back a little each week and you soon become accustomed to the cutback and enjoy being able to pay the bills, in full, on the day it arrives.
A budget gives you a visual list of your bills and how much they cost, it's easier for you to decide if you need to cut back anywhere. It's also easier to just say "NO" to any new items. Maybe even say "NO MORE" to some items already on the list.