Setting money aside for savings or paying off debt can seem impossible without a budget. You may have hundreds of dollars that you can dedicate for a specific purpose, but they are easily spent on frivolous purchases when you don’t track your income and spending. A budget will help you reach your financial goals. Anyone can create a basic monthly budget in less than an hour.

Start by gathering all of your income sources and adding them together. For example, use a few recent pay stubs to calculate your monthly income for your job. Add in any child support, alimony, settlements or other sources of money in your life. Your total monthly income will help you determine what you can afford to spend on each part of your lifestyle.

Determine what percentage of your monthly income is spent on housing first. Include what you spend on mortgage payments or rent, insurance for your home and a portion of your annual maintenance costs. This part of your budget should not exceed 30% of your monthly income. Aim to make 25% of your budget payments for housing. You might be able to renegotiate your mortgage rates or find a less expensive rental property.

After housing, your next biggest expense will be utilities. Aim for 15% of your income for utilities. If you are spending closer to 20%, consider investing in more efficient sources of heating and cooling. Food, including restaurant meals, shouldn’t take up more than 15% either. These account for your most essential expenses. If you can’t trim much spending on these three categories, break down the rest of your monthly budget to find non-essential spending to cut.

Any money spent on entertainment, luxury services and personal care can usually be cut back if you need to save or pay down debt. Aim to keep any non-essential category under 5% of your monthly income. Some people may be able to cut down their transportation or medical costs as well. Switching to public transportation or carpooling could take your car-related expenses from 10% of your budget to 5%. This could leave you with a few hundred dollars for your retirement fund each month.

Saving all of your receipts for one month is the best way to get a clear handle on what you are spending. Most people tend to underestimate their daily spending when creating a budget. You may think you only spend a few dollars a month on coffee and snacks, but a $3 stop at a coffee shop each weekday adds up to over $60 at the end of a month.

Blogger Bio: Kristen Mulheim is a private publisher for They help consumers find good prices on hotel and resorts in North Charlotte. Click here to learn more about their product and how they help people identify deals on hotel and resorts.