If one category exceeds 30% by very much that is part of problem. This is area where you need to concentrate your efforts.

You can approach this in two different ways. The first method is to cut your spending in category that you have determined to be problem. The second is to cut spending or expenses in other categories to make up difference.

I recommend that you be careful about cutting your Household Expenses too much. While you can cut your grocery bill and some other areas, you will need a certain amount of money to run your household.

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As with any other type of problem you are not going to solve your money problems by worrying about them. It takes action. The sooner you get started better.

As with anything else there are basic guidelines that are universally accepted. These vary somewhat depending on who you talk to but below percentages will get you close to what is accepted.

What I am talking about is percentage of your income (take home pay) that you should allot for each category of your budget. At Budget Stretcher I have broken this down to just 4 categories to make your budget experience as simple as possible.

Here are percentages:

Housing - 30% of your take home pay. Housing costs cover your rent or mortgage payment, taxes, etc.

Other Bills - 30% of your take home pay. This is catch all category that includes your regular bills excluding housing. Your credit cards, utilities, loan payments, car payments, insurance, etc. are all covered in this category.

Household Expenses - 30% of your take home pay. This is what it takes to run your household. This includes groceries, car gas and all other stuff you have to pay for between paydays.

Savings - 10% of your take home pay. This is possibly most important of all of categories. If you don't have a long term and short term savings program it is going to be difficult to solve any money problems you may have.

At least %5 of your take home pay should be used for short term savings. This is very important because it is what is going to cover any unexpected expenses that may pop up. This will prevent use of credit cards to cover these expenses.

Your short term savings should be kept in a savings account or other savings program that will allow you to lay your hands on it quickly. This isn't to say that you should use this when money runs short at end of month.

You should also put aside at least 5% of your take home pay for your long term savings. One day you will want to buy a house or send kids to college and this is pot of money that is going to accomplish that.

Even if you have a 401k or other retirement plan it is still a good idea to put this money away. This money needs to be in an account that will pay you most interest without a lot of risk.

Since I'm not an investment expert I won't even begin to make a recommendation on where to invest this money. You will need to consult a competent investment broker for this advice.

As you can see by percentages above your budget is actually as simple as 2+2. If your bills and expenses doesn't fit into recommended percentages then you need to work on it until it does.

If you are like I was you can probably come up with a thousand reasons why you can't budget your money. Either you have too many bills, you are too far behind on those bills or you just don't want to make perceived sacrifices necessary to live on a budget.

I'm not going to try to fool you into believing that there won't be sacrifices. I am going to tell you that what ever sacrifices you have to make will be well worth effort.