These days, tightening your belt isn't just a fashion statement, it's a way of life. Rising interest rates, soaring rents and petrol prices seem to be swallowing our pay. But by joining the ranks of the newly frugal you can stop frittering away your finances and get what you really want.

There's a simple rule to financial happiness — don't spend more than you earn.

Tammy May, whose Adelaide-based MyBudget company helps people get on top of their debts and achieve their financial goals, firmly believes it's not so much about how much you earn, but how you manage the money you have. It all comes down to having a budget.

But you're unlikely to plot a perfect budget first go, says Tammy. "It's not something you do and then leave it, it's something that is constantly adjusted. Your first fortnight isn't going to be exactly what you budgeted for; your electricity bill might come in at $60 higher than you thought, you may have had a sick day you didn't get paid for," she points out. But don't be disheartened — just adjust your figures.

Plan a budget
In planning a budget, your first step is to work out your average weekly income. The next is to work out your expenses, and that means everything you spend money on, from cups of coffee and donuts to cigarettes, petrol, rent, bills, kids' sport fees and haircuts. Some people do this by keeping a diary and writing down everything they spend for a few weeks; others work it out by collecting together all their old bills and shopping dockets and calculating a weekly average.

There will be some costs you can't change, but once you know where your money is going, you can trim and tuck other expenses to make your lifestyle fit your cash flow. There are plenty of online budget planners you can use.

The key is to be realistic. Allow some money for fun in your budget — you don't want to be a humourless miser. You could even factor in $10 saving a week to splurge on something totally frivolous every two or three months.

And it's vital you allocate some of your income for savings. "At MyBudget, no matter what a client earns or what their debts are, we always factor in savings. So if an emergency comes up, the client always has something to fall back on," says Tammy.

"[Having a budget] actually brings a little bit of relief into your life — it's not a worry about 'Can I afford this or can't I?', because it's in your budget. It actually makes spending a lot nicer. You can have that guilt-free spending, because you know you have budgeted for it."

7 Frugal habits

1. Have your own "payday".

Keep your everyday spending in check by allocating a set amount of money each week to have in your pocket. Withdraw that same amount on the same day each week.

2. Stash before you splash.

If you really want something, like a holiday, a new computer or some new clothes, don't whack it on the credit card, save up for it. "If you don't have the cash now, you can then think about whether you really need the item and whether you really need it now," Tammy points out. Put aside some money in your budget each week. And to stop yourself raiding your savings, keep the money in an account you can't easily access from an ATM.

Tammy waves a warning flag over "interest-free" and "no repayment for X months" offers. If you don't pay off an item in full within the interest-free or no-repayment period, then often very high interest charges can kick in. Sometimes these are charged on the original amount owing, no matter how much you have paid off, she says.

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