Are you confused about how best to manage your money with the current hit to household income from higher prices and with mounting concerns the economy is sinking into recession?

You have plenty of company.

There seem to be so many forces outside our control affecting household finances, including COVID, war in Ukraine and the Fed's monetary tightening. You can't get rid of the uncertainty. It's part of the human condition.

But embracing two basic insights from personal finance will go a long way toward gaining a degree of control not only over your money, but over your life choices.

That was my takeaway from a recent program on Minnesota Public Radio hosted by Angela Davis. Her guests were Henry Rucker, the financial coaching and homeownership manager at Project for Pride in Living; Ross Levin, founding principal and president of Accredited Investors, a wealth management firm (and fellow Star Tribune columnist); and me.

We found ourselves reinforcing each other in emphasizing, first, the importance of developing a budget and, second, using that information to build a financial plan. The advice is basic. But creating a budget and financial plan is critical to managing money well in all seasons, especially when economic risks are rising sharply.

A budget is a tool for seizing control over financial chaos. The information in a budget captures the income coming into your home. It balances that information against the money going out for everything from essential expenditures (rent, gas, debt payments), miscellaneous bills (pet care, union dues), and discretionary spending (concerts, restaurants).

"You have to be in control of the budget," said Rucker. "You need to know where the money is going."

There is no shortage of resources to help you develop a budget. Financial institutions offer templates to their customers. Nonprofit organizations that work with people on their finances offer budgeting resources. So do university extension services. There are many online options. A pen and notebook work well, too.

The information in your budget is invaluable for your financial plan. The information will help you figure out how to attack credit debt, find money for savings or address some other immediate need.

A plan also takes long-term goals into account, say, buying a home for the first time. Enlist the knowledge and insights of family and friends in devising your plan. "You need a plan to put your finances in order," Rucker said.

I couldn't agree more.

Farrell is economics contributor to the Star Tribune, Minnesota Public Radio and American Public Media's "Marketplace."