You’ve seen governments worldwide struggle to balance their budgets and stay afloat. Ironically, the basics of balancing the income and expenses of a country are not that different from what you do with your finances. A well-planned budget is an invaluable tool if you want to improve your financial position. Five steps will get you started:

• Organize your bills – Gather your monthly, quarterly and annual financial obligations. Look back through your check registers or bank statements to collect data of all the products and activities that drain money from your wallet. Then, list and categorize these expenses. Saving should be on the list, too, since it takes money out of circulation.

You’ll be ahead of the game if your budget accounts for unplanned expenses such as a visit to the emergency room and car or home repairs. While you may not be able to name what financial burden will arise in the next 12 months, you can be sure something will cause you suddenly to part with some of your hard-earned money. If you have cash set aside for those occasions, you can pay the expense and avoid a crisis. If not, you risk defaulting on other obligations, damaging your credit and causing stress in your life.

• Scrutinize the numbers – To create a realistic budget, examine and adjust the expenses you’ve identified against your take-home pay. Highlight areas that are out of whack. Ideally, your housing costs should not exceed 30 percent of your total expenses, transportation 20 percent and food less than 15 percent.
• Fix what you don’t like – To change your financial reality, set realistic and stretch goals that will improve your bottom line. When you identify a target – for example, to trim $100 from your monthly food budget – break it down. Be creative, and rise to the challenge.
• If it’s clear you don’t have sufficient money coming in each month, consider ways to increase your income. Do you need to work overtime, go after a promotion, pursue a new career or get a second job?

Follow your budget – Adjust your spending as necessary. Monitoring your budget can make your money more manageable and give you the feeling of being in control.

• Check in with a financial adviser – Consult a professional for an honest assessment of your financial health, and take advantage of insights and strategies that can help you improve your finances in 2012 and beyond.

This column is provided by Ameriprise Financial Services for Tim Dameron, its financial adviser in Rocky Mount.