budg·et (bŭj'ĭt): An itemized forecast of an individual's income and expenses expected for some period in the future.
Budgeting is one of the basic skills required for frugality to really become effective. Some people are overwhelmed at the prospect of a budget, but it needn't be difficult!
(I find a spreadsheet the easiest way to keep this information organized, but you can do it any way you find works for you.)
List all of your monthly expenses (for fluctuating expenses, go with a high estimate of what it would be every month). Leave out groceries and gas.
Calculate and list your monthly income.
Subtract your monthly expenses from your monthly income. The result is the amount leftover that you have to work with per month (i.e. spend on groceries, gas, etc).
With these very basic steps, you'll be in the know about where you actually stand with your financial situation.
I also recommend keeping track of all of your expenditures (yes, everything, even the snack from the snack machine). I have been doing this for years, and it's a wonderful tool to show me how much I SHOULDN'T be spending on certain things, and to let me know when I need to put a hold on spending for the month. It also keeps me in check when I go to the grocery store or when I want to make a purchase. It lets me know whether or not that money is actually available to me.
Check in on your bank balance weekly, so that you know a close approximation of how much is in there. This will also give you perspective on what monies are available to you.