Managing your finances is not only stressful and complicated, it's also extremely boring! That said, money does help you to achieve a lot of the things you want to do in life. If you've paid all your bills and still have money to spare at the end of the month it's a very liberating feeling.

Step 1: Set Your Goals

The first step to getting a grip on your finances is to work out your goals. Be specific and write them down. Set some big goals, like buying your own home or saving for retirement. And some smaller goals that will help you with the big ones, like saving for a deposit or paying off credit cards. Remember to review your goals every six months to see if you are still on track.

Step 2: Make a Budget

Budgeting may sound like the ultimate cure for amnesia but it's well worth it (and will probably help you sleep better at night for all the right reasons). A budget is a plan of the amount of money you expect to receive into your household (income) and how it is spent (expenditure). If there is more income than expenditure you have a surplus which can be put towards your goals. If the result of your budget is a deficit then you need to either reduce your expenses or increase your income to keep your head above water.

When putting together your budget, receipts and bank statements will help you see how much you spend day to day on things like groceries, power and rent. Don't forget to include occasional expenses like vehicle licensing, gifts and holidays. A budget can be made quite easily as a spreadsheet on your PC or just written down.

You could try and cut down on your spending and you may see a bit of improvement in your budget. Or you could do a clean sweep and really make a difference. To do this you need to strip the budget right back to necessities only, like rates, mortgage, insurance, etc - expenses that you have very little control over. Then, set an allowance for things like petrol, groceries, home maintenance, etc (don't include spending money). Keep the allowances as tight as possible but still be realistic. If you've got a family of four to feed then a grocery allowance of $40 a week isn't going to work. But perhaps buying store brand products will mean you can reduce your usual grocery bill. With the surplus, decide how much you would like to save and how much you will have as spending money for non-essentials. If you put a cap on your spending you are more likely to stick to the budget. Keep working on reducing the allowances; eg, shopping online for your groceries so you don't have impulse buys, getting the family to be more energy wise and save on your power bill or unsubscribing from that movie channel that no one watches.

As well as reducing spending, you may be able to increase your income. Nobody likes asking for a pay rise but there are ways that you can offer your employer the opportunity to pay you more, like taking on more responsibility, undergoing training and development and doing overtime.

Everyone has stuff that they no longer need or want. Online auction sites, free ads, garage sales and car boot sales are a great way to not only make a little bit of money but to clear some clutter. You could also consider taking in a lodger or starting a small business from home.

Step 3: Get Money Wise

Choosing to bank electronically, not having a cheque book or cancelling paper statements could all reduce bank fees. Talk to your bank to find out if a different type of account would suit you better.

Setting up automatic bill payments from your bank account can not only save you forgetting bills and incurring fees but a lot of companies will also offer a discount.

If you have more cash in your everyday account than you need straight away, consider transferring some to a high interest savings account. Usually this can be done in a matter of minutes online and the interest will soon mount up.

Step 4: Break Free of Debt

If you have short-term debts (credit cards, hire purchases, overdraft), consider paying them off before you start saving. The best strategy is to focus on paying off the form of credit with the highest interest rate first. Always attempt to make more than the minimum payment to clear those debts faster.

If you need to borrow money or get credit, shop around for the best rate. For instance, a personal loan from the bank may work out better than increasing your credit card balance. Always check the fees and charges in the small print before you sign your life away.

Tip: If you can't afford to pay cash for something ask yourself if you really need the item you're buying.

If you have a mortgage then making higher payments can reduce the amount of interest you pay and therefore reduce the term of the loan. So if you can comfortably afford to do so, pay more.

Step 5: Create Your Safety Net

Once you've learnt to stick to your budget, you've paid off your short-term debts and you're seeing a surplus it's time to create a safety net for you and your family. It's a good idea to save into a separate account enough money to cover say three or four month's of expenditure as you never know when the household income may take an unexpected hit due to redundancy, illness, etc. This way you won't have to borrow money while looking for a new job or getting back to health.

What are your top tips for budgeting, increasing income, reducing costs or being money-wise?