Lotsa talk about money these days. Tightening the old belt. Sticking to the old budget. But how can you stick to a budget when you don't actually have one? Good question, huh?

Financial health is easy -- there are just three questions you have to answer: What have you spent in the past? What do you make? How much can you spend in the future?

So, take out three blank pieces of paper. On the top of one, write "Actuals". On the second piece, write, "Income" and on the third, write "Spending Plan."

Actuals: To figure out your actual spending, you'll need to look at the past three months. Take out your past three checking account statements and credit card statements. On the Actuals sheet of paper, make categories: Housing Expense (mortgage/rent; utilities; repairs), Food Expense (groceries; eating out), Transportation expense (car payment; insurance; gas; maintenance), Clothing Expense, and Other. If you have your own, particular big spending category, such as Education or Medical care, go ahead and list those expenses in a category of your own design.

Now, look at your expenses in each category for the last three months -- add each up and get an average monthly cost. Write down the average monthly spending by category, and get your total.

Somewhere on this sheet of paper, write down the balance for each credit card you own and note your average monthly payment and the interest rate on every account. Think back to the entire year -- did you have any big one-time expenses, like vacations, or orthodonture, or rebuilding a 1965 VW Beetle? Make a note of those expenses, too.

Now, let's move to Income.

On the Income sheet, write down your monthly income -- what you take home after all deductions. If, like me, you have your own business and income fluctuates, make an average of the last three months. If you have a regular income, this part should be easy.

Now, look at the total on your Actuals compared to the total Income.

How does it look?

If your income exceeds your expenses, you're doing great and can continue to the Spending Plan at your own discretion.

If your expenses exceed your income, honey, we've got a little work to do. You can either increase your income or reduce your spending. Just a note here -- if you're not doing everything you can right now to maximize your income, you need to start doing so right away. That may mean you have to start taking a different kind of client (those who pay are a good start), or ask for a raise, or take a different job. If you're working at a discount, you're not doing yourself any favors.

Let's look at reducing your spending. On the top of the Spending Plan sheet of paper, make a note of how much you need to trim from your expenses to come into line with your income. Start by transferring the information from Actuals. If possible, break out as much detail as you can in each category -- utilities, for instance, would be electric, cable, phone, natural gas/heating oil, water/sewer/trash, etc.

OK, so where is the largest expense you can control? Maybe you can lower your transportation expense by using less gasoline, changing the deductible on your insurance, taking the bus or subway, or washing your own car. You may be able to reduce your food costs by eating out less, buying what you know you'll eat -- which may mean the shopping duties go to the most disciplined person in the house.

Let's say, for the sake of argument, that you have some cash on hand. Take a look at those credit cards -- target the lowest balance with the highest interest rate and pay that sucker off first. Should free up your monthly cash flow.

On the sheet of paper, make a new target for your spending in each category.

You're not done yet, darlings. Now, the hard part.

Total your projected expenses. Add twenty percent. "But," you gasp, "If I do that, my budget won't work!" I know. I'm really, really sorry. You'll have to go back through and make enough reductions to fund this really important twenty percent -- your cushion. This is for when natural gas prices spike to all-time highs. Or your health insurance premium doubles. Or you need a crown. Or you underestimated your real expenses.

If you're really stoked and ready to play, put another ten percent into savings, ten more into charitable giving and another ten into your investments. Doing so means you may have to re-jigger your spending until you get to a truly workable spending plan.

"Too much trouble" is what some of you are saying. I hear you and know just what you're saying. Because I was once exactly like you. But while ignorance may be bliss, it doesn't help when the bill collectors start calling. Take charge of your money, and, believe it or not, you take charge of your life.