Start by adding up your monthly income, then check bank statements and bills to list essential costs such as rent, utilities, food and travel. Separate fixed payments from variable spending, and include irregular costs by estimating an annual total and dividing it by 12. Subtract your spending from your income, then set realistic limits for non-essentials, debt repayments and savings. Track your spending regularly, review the budget each month and adjust it when your income or circumstances change.