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The “B” word is reentering the economic fray.

Budget is a top search on Google, as debt-ridden Americans frantically hunt down ways to create a manageable personal budget.  How much to spend on needs versus wants ? How to make the most of your hard-earned money? If you are in serious debt, consult a credit counselor who can help devise a more strategic pay-off plan and budget for you.

Everybody else, consider these percentage guidelines below.  MainStreet kept in mind that the average household income in this country is roughly $46,000 a year. After taxes and deductions for a health care plan, social security, etc., the monthly take-home pay ends up being around $2,500, give or take.

Bear in mind that this is just a general guideline. In some cases (hopefully) you won’t have any credit card debt, leaving you with 30% of your take-home pay to play with and sprinkle throughout other areas of your life. 

We often neglect to properly save for retirement because it feels like there’s plenty of time to save later, especially when living paycheck to paycheck now. Remember: Social Security is not all it was cut out to be and the younger you are, the less likely you will get much, if any, money from the government. Workers in their 20s should be automatically investing at least up to 10% of their paychecks in their employer’s 401(k) program.  For everyone else, store away at least the minimum amount your company will match. Believe it or not – 60% of 401(k) participants do not contribute enough to obtain a full company match. That’s free money left on the table!  Additionally, consider opening an individual retirement account or IRA at your local bank – either a ROTH or a traditional plan.  Which one you choose depends on your income level and what tax benefits you’d prefer.

Having at least six months of your take-home pay in a liquid savings account for a cash emergency is a true measure of financial freedom. Take at least 10% of your paycheck and automatically put it in either an FDIC-insured money market account or an interest-bearing savings account. Online bank accounts at HSBC Direct and ING Direct currently offer some of the highest interest rates. Make sure to shop around at

This may seem like an aggressive budget for paying down debt. While in years past we may have just paid the minimum balance every month, these days carrying too much debt is a serious impediment to financial security. The best interest rates on bank loans are going to applicants with credit scores of 740 or higher.  A high credit utilization ratio (i.e. more than 30%) will take a major bite out of your credit score.

We have enough to worry about with rising unemployment, depreciating home values and higher prices for food and gas.  As individuals, there’s little we can do to change the macro economic hardships, but we do have the power to erase personal debt.  Attack your credit card debt by reducing your balance on your highest interest rate credit card first. If your debt is too difficult to manage, call a credit counselor: The National Foundation for Credit Counseling is a good place to start.

If your mortgage is getting out of hand, call your bank immediately. Banks have several refinancing and restructuring options to help you make your payments and avoid foreclosure. To reduce your utilities expenditure, consider just using your cell phone plan and save at least $25 a month on a landline. If you need to make international calls, encourage your overseas friends and family to join you in signing up for, which offers free VOIP (voice-over-internet-protocol) services.  Finally, if your housing costs exceed the recommended budget, consider reducing spending in other areas.

One way to reduce your car payment is to refinance to a better loan with a lower rate.  To bring down your insurance payment, opt for a plan with a higher premium. That may ease your monthly payment by up to 30%. It also helps to have a strong credit history (another reason to aggressively pay down debt). To save on gas, carpooling is an obvious answer, but little things like emptying your trunk, inflating your tires and driving five miles below speed limit can also increase your car’s fuel efficiency.

FOOD – 5-10%

The average two-person household spends $200 a month on groceries. Save a quick $50 just opting for generic brands. Want to cut another $30 to $50 a month? Reduce your eating out habits in half, families spend more than 40% of their food budget on dining out, according to Consumer Reports.

Now that you've covered your needs, you can spring for your wants. At this point, you're probably left with somewhere between 5 and 10% of your disposable income (and that might be generous).  This includes vacations, concert tickets, etc.  As an incentive to paying off your debt, the more you pay off, the more you’ll be left with for this category.

Catch more of Farnoosh’s advice on Real Simple. Real Life. on TLC, Friday nights at 8 p.m.