When you check your bank account or balance your checkbook, you may be confused about why the numbers are so low. Do you ever wonder what happened to your money? The answer may lie in your household budget. If you always find yourself out of money at the end of the month, this means your expenses are probably higher than your income.

In order to break the cycle of living paycheck to paycheck, you need change your spending habits and create an effective household budget. The following spending guidelines will help you budget and reduce your spending.

Save

It’s not the top line item on a typical budget, but it should be. Pay yourself first: try to save at least 10 percent of your income each month.

Mortgage

Your home is probably your most expensive asset. It provides you with safety, peace of mind, and comfort. Paying for it should not be a burden. Although some mortgage lenders will lend up to 45 percent of your gross income, you should be careful, especially if you are young. If you are young and don’t have kids, try to keep your mortgage at less than 2.5 times your income. This should give you enough savings and room to adjust your budget to lifestyle changes such as starting a family, relocating for a new job, saving for college, and retirement.

For people over 50, saving money for retirement should be a primary focus. If you have to get a mortgage at this stage of life, look for a cheaper place or consider moving to a lower-tax state.

What to do if you’re over budget? Refinance or downsize.

Rent

Your monthly rental payment should be no more than 25 to 35 percent of your income when you are just starting out on your own. Older families should budget for less than 25 percent of their income, especially if they are saving for financial goals such as buying their own home or retiring in the next 10 or 15 years.

The above guideline is developed to determine a standard against which to compare present rental costs. Unlike homeowners, most renters can move at the end of their lease, although it may not always be the best option. If your rent exceeds 35 percent of your income, you may live in a high-rent area. People living in high-rent areas may not be able to move as easily as others because circumstances such as family, work, or school obligations may simply be out of their control. If this is the case, cuts in other areas of the budget, such as entertainment, recreation, or miscellaneous expenses, may be needed.

Daily Living Expenses

The last items on your budget are your daily living expenses. Forbes recommends the following guideline allocations:

• Groceries and dining out: 10 to 15 percent of income
• Utilities: 4 percent to 7 percent
• Personal care and clothing: 5 percent to 10 percent
• Health care and premiums: 10 to 15 percent
• Loan repayments: 7 to 15 percent
• Discretionary spending and entertainment: 1 percent to 5 percent

The foundation of a solid financial plan requires having an effective household budget. It’s needed at every stage of life. As your life changes, review your budget and if necessary, make adjustments.

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This article was syndicated and originally appeared on the CESI Debt Solutions website.