In this economic climate, more of us are struggling to pay the bills, buy groceries and fill up our gas tanks. Paying off the mortgage, putting the kids through college without financial aid, and amassing $1 million for retirement seem out of the question now. Just having cash left over at the end of the month would be nice.

Accumulating a nest egg—or even saving for a rainy day —gets put on the back burner for many who find themselves just trying to get by. However, you can break out of the paycheck-to-paycheck rut, pay off debt and actually start setting aside money. The key is to start tracking your spending, develop a home budget, set goals and make sure you’re not paying any more than you have to on your debts.

Track spending and watch expenses

“People who live paycheck to paycheck have to take a hard look at what they’re spending money on,” says Kathleen Campbell, president of Campbell Financial Partners in Fort Myers, Florida. “It’s like when you try to lose weight and you don’t think you eat that much—until you start counting calories. It comes down to trimming what you spend and maximizing where your money is going.”

Start by tracking your spending on a daily basis—down to how much you paid for a cup of coffee. Every penny counts when saving. Campbell suggests using a notepad, personal finance software such as Quicken or a free budgeting tool like Quicken Online, to record everything on which you spend money. The list needs to be more detailed than just “groceries, $400; gasoline, $200.” Write down exactly what you bought and how much it cost.

Don’t stop with the obvious expenses such as utilities, gasoline, food and recreation, though. Look at how much you’re spending (perhaps unnecessarily) to maintain bank or investment accounts, or pay down debt. High fees on checking, savings and retirement accounts can eat away at your earnings. And high interest rates on credit cards and loans can force you to pay more than you have to over time.

This exercise can be time-consuming and frustrating, but you need to know how you’re spending your money before you develop a spending plan. “Until you know what’s going out, you can’t get a handle on it,” says Lisa Byles, owner of Byles Financial Planning in Richmond, Virginia. “Then decide where you can cut.”

Start cutting

Sometimes it can be painless to cut back—especially if you’ve been spending money on unnecessary things. Even a small income can go a long way if you make minor changes, such as eating in rather than dining out—which is the biggest expense most people easily can cut, says Campbell. Don’t just eliminate dinners out—cut out those workday lunches at fast-food joints, which can be pricey, by packing a lunch instead.

Here are several other ways to cut your spending:

If you’re living paycheck to paycheck, you might be living beyond your means, too, by using credit cards or loans. If you’re just making the minimum payments, you’re racking up a lot of interest and just throwing your money away, Campbell says. To make a dent in that debt, here are ways to get lower rates—and lower monthly payments, too.

If you have a good credit history, call your credit card company to ask for a lower rate. Or find a credit card issuer that offers low fixed rates to cardholders with good credit.

Take advantage of low-interest introductory offers and balance transfers. Many credit card companies offer 0 percent interest on balance transfers for a limited time—usually four to six months. With no interest, your monthly payments will make a bigger dent in your balance. This can be a great strategy for someone who is well-organized. You’ll have to keep track of when the introductory rates expire and be sure to pay up or move on.

Avoid using cards altogether. Some consumers find happiness with debit cards that combine the convenience of plastic with no-threat-of-debt peace of mind.

Lower your monthly long-distance bill by replacing a landline with free Internet phone service, such as Skype. To find out how you can save on cable, cell phone and electricity costs—as well as travel and shopping—see Save Money on Practically Everything.

You may be paying more than you have to for auto insurance. Remember, Campbell says, insurance is for catastrophic events, not the small dents and dings you could pay to fix. So consider raising your deductible to lower your car insurance premium.

You might also consider raising the deductible on your homeowner insurance to lower your monthly rate. And you can cut health insurance costs by pairing a high-deductible (low premium) policy with a health savings account, which lets you contribute pretax money to cover out-of-pocket medical expenses. Just don’t ditch your health insurance altogether or you’ll find yourself in serious financial trouble if you need to take a trip to the emergency room or become seriously ill.

You can lower your monthly payments by consolidating your loans through the Federal Direct Loan Program. This will allow you to refinance your loan at a low fixed rate and stretch it out over a longer term.

You’re probably well aware that you get slapped with a fee every time you’re late on a credit card payment. You also probably know that you’ll have to shell out a few extra bucks to use an ATM from a bank other than your own. But did you ever stop to think how these fees and others eat away at your home budget? For example, why pay for a checking account when there are plenty of free ones out there? Even if you have free checking already, make sure you’re not getting slapped with insufficient funds fees or other fees.

If you have a brokerage or investment account, you also might be paying more in fees than you realize. For example, if you have an IRA with a brokerage or mutual fund company, you’re probably paying for someone to manage the account. If you have stocks in that account, you might have to pay a commission every time you make a trade. There may be other fees, too, but you might not be aware of them because the expenses are deducted before the fund reports results to shareholders.

Save on fees by using online brokers, selecting low-cost no-load mutual funds and making sure you are aware that some investment vehicles, such as annuities, usually come with high fees.

If you’re really snowed under, small spending cuts won’t be enough, Byles says. Look at major cuts, such as downsizing to a smaller house, or buying a less-expensive vehicle, or ditching your car altogether if you live in a city with good public transportation.

To motivate yourself to spend less, establish an achievable goal that you can get excited about. “It’s easier to follow your budget if you know in doing so you can retire or send your child to college or take vacation,” Byles says.

When establishing your goals, be sure to differentiate between wants and needs. Short-term needs, like buying a new car to replace one that’s barely running, or paying for a costly medical procedure, are your top priority. Longer-term needs, such as a retirement fund, are priority number two. And wants, such as a vacation in the Bahamas, fall to the bottom of the priority list.

If you’re married or have a significant other, make sure you set and prioritize your goals together—without criticizing one another’s spending habits. Each of you should write down five goals, then compare lists to see which you agree on and how to prioritize them. You need to know what direction you want your financial lives to take before crafting a budget to get there.

Try using some of these tips when budgeting:

  • Cut interest rates
  • Find deals
  • Lower insurance costs
  • Lower student-loan payments
  • Avoid unnecessary fees
  • Set goals

Boost your income

Another way to help avoid living paycheck to paycheck is to increase your income—without begging for a raise or switching careers.

Start by adjusting the amount of taxes being withheld from your paycheck to match what you’ll actually owe Uncle Sam. Most workers have too much withheld every payday. You can reduce withholding – and instantly increase take-home pay – by filling out a new W-4 Form with your employer.

Then look for other ways to keep more of your paycheck going into your pocket instead of Uncle Sam’s. For example, employer-sponsored programs that allow you to contribute pre-tax money toward routine expenses—such as health care, child care or retirement savings—can help your paycheck go further.

And take advantage of your company’s 401(k) plan if your employer matches contributions. If you’re not contributing enough to this retirement plan to get the employer match, you’re throwing away free money, Campbell says. Plus, your contributions lower your taxable income and go straight to a money-earning account before you can get your hands on it and spend it.

If you need more help, find a fee-only financial adviser who charges by the hour. Most would be happy to spend a few hours with you in order to help you prioritize expenses and set a budget, Campbell says.