The first step to becoming more financially stable is writing down what you spend — and being honest about it.  But what happens when you subtract your expenses from your income, and you’re in the red?   Pouring yourself a stiff drink may be a first step, but it’s not going to solve the problem for you.  Instead, you’re going to have to put on your big-boy or -girl pants and get down to the business of trimming your spending.

But one of the tough parts about budgeting is making reasonable assumptions about what you should be spending on any one category of your budget.  Does it make sense to spend 50% of your income on housing?  Should you cut your monthly savings?

Our brains are funny little organs.  We can convince ourselves that we must have that huge flat-screen television set or we deserve to go out for drinks with the girls every Friday night.  But the numbers don’t lie.

Math can help keep you honest about what you’re earning, spending and putting away for a rainy day, retirement or when you decide that you’d rather be a writer than an advertising sales executive.

Each family or person is different, of course, but there are some great guidelines that can help you see if you’re on track. Here are some examples:

• Housing should cost no more than 28% to 33% of your monthly gross income.
• Groceries should account for about 18% of your monthly gross income.
• You should be saving between 10% and 20% of your monthly gross income.

This is one of those situations when math can really help you lower the emotional impact of your decisions. Knowing what is reasonable to spend on these items can make it easier for you to actually make the changes.

So let’s say you’ve tallied your income and expenses and come up short. (No wonder your credit card bills are so high!)  You  gross $3,127 each month, and your rent is $750 each month.  You spend about $650 on groceries and meals out each month, and you try to put away about $100 into savings.

Of these expenses, what should you cut?  Let’s take a look.  The experts estimate that your housing should cost no more than 28% to 33% of your monthly gross income:

28% of $3,127

0.28 x $3,127

$875.56

33% of $3,217

0.33 x $3,127

$1,031.91

Given your monthly income and the experts’ guidance, you should be spending between $875.56 and $1,031.91 each month on housing.  Your rent is much lower that that, so unless you’re having your living room redecorated by Martha Stewart herself, you should be good to go in that category.

On to groceries:

18% of $3,127

0.18 x $3,127

$562.86

But you’re spending $650 on groceries and eating out each month.  Clearly this is where you can cut some of your spending.

Finally, take a look at savings.  While you could zero this out, so that you can pay off some debt, it’s probably not a good idea to forgo savings altogether.  Besides, didn’t all of our parents preach about having a nest egg?  (In fact, financial experts recommend that we have the equivalent of at least 4 months of our salary tucked away — just in case.)  Building your savings takes discipline and time.  And there’s no better time than the present to get started.

But how are you doing now, according to the expert guidance?

10% of $3,127

0.10 x $3,127

$312.70

20% of $3,127

0.20 x $3,127

$625.40

Hold the phone.  With your measly $100, you’re not even close to what is recommended.  Perhaps you could cut back on your clothing budget, so that you can actually retire on time or have a safety net if your job suddenly goes poof!

I’m the first to admit that these suggested percents are not the be-all-end-all of budgeting advice.  Each one of us has extenuating circumstances to consider.  But why not start with the math?  In terms of what we’re spending, saving and earning, the numbers don’t lie.

P.S. For the really diligent among us, there’s something called the 50/30/20 budget: Must-have expenses (housing, food, insurance, etc.) should account for 50% of your income after taxes, while 30% should be “wants” and 20% should be savings.  The trick here is deciding what is actually a “need” and what is really a “want.”

Using these percents, how are you doing with your monthly spending? Calculate what you should be budgeting for housing, food and savings, and then compare those results with your actual spending and savings.  Tell us how you stack up in the comments section — and best of all, whether the result is surprising.