Do you have a household budget? If you’re like most Americans, chances are you don’t. A Gallup poll  last year revealed that just one in three Americans prepare a household budget.

However, a budget plan is one of the most important things you can give yourself. It helps you to know where your money is going, helps with savings or other financial goals and it simply keeps you on track so that you don’t spend money you don’t have.

Unfortunately, people who do have budgets often don’t stick to the plan but instead simply have a wish list of how they want their finances to work while they continue spending unrealistically.

So how do you create a realistic budget that you can live with?

The first step is to track your spending. You already know how much you spend on utilities, mortgage and insurance but what about smaller expenses? For a month write down every penny you spend. Five dollars for lunch and thirty for gas add up pretty quick so it is necessary to be realistic about all of your daily expenses. At the end of the month, add up how much you spent.

Now sit down and make a list of all your expenses. It can be a handwritten list or some kind of worksheet on the computer.

Simply fill in the amounts and add up your month’s expenses. Are they more or less than your income? If they are less than your income that’s great! That means you have extra money to save, to dedicate toward debt payoff or to spend.

If your expenses are greater than your income, it is time to look at cutting expenses. Think about extras that you don’t really need like premium cable or a land line that no one in the house uses. Also look at major expenses like car insurance. Can you get a cheaper rate? How much money are you spending in restaurants or on recreational shopping? Are you wasting a lot of food at home? Maybe you are overbuying for your family?

Here are a few other things to keep in mind.

One of the most powerful ways to free up money in your budget is to pay off debt. Credit card bills, student loans and other types of debt may seem impossible to move past but making debt pay off a priority in your budget will help you stay on track and see how it is possible to dig yourself out of debt.

Give yourself a little wiggle room in your monthly budget. For those categories that fluctuate, like your water or electric bills, build a little extra into each month so you are not caught off guard. Also try to anticipate irregular expenses. You know your child’s school takes portraits every November so budget for that expense in November. Instead of trying to pay for all Christmas expenses at one time, tuck away a little into savings each month. A VCNB Christmas Club is a great way to do that!

And of course, build a safety net by saving something every month. Most experts recommend saving at least ten percent of your earnings. If this isn’t possible, just save whatever you can – even if it’s just five dollars a week.

Having and sticking to a budget will help you know where your money goes and will help you live within your means. These acts will eventually help you create a nest egg and pay off debt. Want more information on budgeting? Visit Consumer.gov.