Follow the Money: Track Your Spending
Use a budget spreadsheet and note what necessary expenses you paid (mortgage, car loans, or rent) and what unnecessary expenses (coffee, dining out, gym membership). This will help you get a handle on what is going out versus what comes in.
Adopt the 50/20/30 Rule
Once you have figured out your expenses, sit down and start planning out your expenses based on the 50/20/30 Rule. Your Essential Needs (rent or mortgage, car, utilities, etc) should account for 50% of your income. Your Financial Responsibilities should account for 20% of your income. These expenses include contributions towards financial foundation like retirement or debt payments. Lifestyle Spending such as a gym membership or nights out should account for 30% of your income.
Don’t Cut Out the Fun
Just because something is not necessary doesn’t mean you should not have it. Instead, learn to moderate. Eating dinner out every single night might be something that you enjoy but the cost of doing it can definitely have an impact on your bottom line. Instead, have dinner out once a week and cook meals at home for the rest. There is no reason to give up something you truly enjoy if you can afford it.