If your expenses exceed your income, you will have to cut expenses or increase your income. One way to do this is to make more money -- but let's assume that you are not likely to get a substantial raise, find a new (higher-paying) job, take on a second job or make significant money by selling assets. This means you must decrease your expenses without depriving yourself of items or services you truly need. Review your expenses with any eye toward reducing. Rather than looking to cut out categories completely, look for categories you can comfortably reduce slightly. For example, let's say you need to cut $175 from your budget. You had also planned on spending $75 a month to eat out dinner, but are willing to decrease that to $25, thereby saving $50. Keep looking for categories in which you can make similar, small adjustments.

Staying on Track

Don't think of your budget as etched in stone. If you do, and you spend more on an item than you've budgeted, you'll only find yourself frustrated. Use your budget as a guide. If you constantly overspend in an area, you need to change the projected amount for that category -- without berating yourself. Keep in mind that a budget is designed to help you recognize what you can afford; it's not just an exercise in filling in the "correct" numbers. Check your figures periodically to keep an eye on how you're doing. If you never have enough money to make ends meet -- you're using credit cards and not paying the balance in full each month -- it's time to adjust some more.

If you continually come up short, you may need to consider some larger changes. For example, you might sell your newer car for an older used car to free yourself from car payments. As you make adjustments to your budget, give careful thought to your priorities. Everyone has different ideas about what luxury is, and different feelings about what they're willing to give up and what they just can't live without. Think about what you value, and be honest with yourself.

You may have to sacrifice some things that feel important to you, but don't expect to stick to your budget if you've taken away funds for almost everything beyond food, shelter and bills for your mundane necessities. Try making a list of things you feel you can't live without, and whittle your other expenses down to accommodate them. For example, you may decide to give up most of your magazine and newspaper subscriptions because you know you'd go nuts if you couldn't go to the movies once a week. If you make room for at least some of the things you love most, you're much more likely to succeed at your plan.