Rich or poor, you need a strategy for personal finance. You must watch what you spend so that your outgo does not exceed your income. Although there are no debtor's prisons anymore, owing money, especially for everyday living expenses, is a stressful, unpleasant way to live. Use some time-honored principles to put your finances in order.

1. Spend Less Than You Earn

A tried and true rule of personal finance is that you should never spend all the money that you earn. Keep your total living expenses and outgoing payments at no more than 80% of your take home pay. This gives you a cushion that you can use to implement a plan for future needs and even a few luxuries. If you are close to 80% or over already, review your finances to find areas that you can cut back, or look at ways to increase your income.

2. Pay Yourself First

The best way to be sure that you have some money set aside for a rainy day is to pay yourself first. One way to accomplish this is to arrange for your employer to deduct a portion of your take home pay before you receive it. You should aim for at least 10% and go higher if possible. Another method is to set up automatic transfers from your checking account to a savings account at your bank on a specific date. With a little discipline, you can even sweep your checking account, once a month or bi-weekly, so that your savings grow by any amount you have available at the beginning of your next paycheck.

3. Needs First, Wants Later

Make a monthly budget for your needs only. This budget should include the basics such as food, shelter, transportation, healthcare and work-related clothing. You should consider entertainment and recreation, but give them a lower priority. This will help you separate mandatory expenses from discretionary income. It also allows you to figure out how much of your income is being directed towards things you want and luxuries. A good plan for optional things (wants) is to plan how to get them without decreasing the amount that you save or taking the money from everyday living expenses. Delaying the purchase of non-essential items also gives you time to decide if your money could be better spent in another way.

4. Set Smart Financial Goals

Set goals for managing your finances. Create a roadmap for your future, so you will know where you are going and how long it will take to get there. Your financial goals should be specific and measurable. Do not just say you will cut expenses. Decide how much you can decrease one or two expense items. Your goals should be achievable and realistic. If you want to buy a home, you need a plan for setting aside extra money to come up with the down payment. That might include doing odd jobs or seasonal work to reach your goal.

Your goals should be timely. Set a date for them to happen. Even if you miss a milestone, here and there, you can get back on track by reviewing and revising your personal financial goals and strategies regularly.