You want to create a budget, but where do you start? If you’re not financially savvy, creating a budget can be intimidating. Whether you want to save for a mortgage or you have tax debt you need to take care, reach your goals by following these simple tips.

Determine Your Net Income

It’s easy to overestimate your budget if you don’t make an accurate assessment of your income. Instead of incorporating your entire salary into your budget, calculate your net income by subtracting Social Security, taxes, 401(k) and flexible spending account allocations into your budget. The remaining pay is your net income; this is what you use to pay other expenses. If it’s easier, show your deductions in your budget worksheet to keep track of where your total salary goes.

Record Your Spending

Record your expenses or use an app that shows how much you spend. Use online banking that shows each expense in real time, or download an app like Wally to categorize where you spend money the most. Apps like Wally keep track of how much you spend on bills, restaurants, retail, and entertainment. Once you see how much you spend in a month, you can adjust your budget accordingly.

Begin your budget worksheet by listing all your fixed expenses. These include regular monthly bills like car payments, utilities, student loans, rent, backup withholding payments, or mortgage payments. These are expenses you can’t adjust, but you’ll get an accurate assessment of how much money will get taken out of your paycheck each month.

Set Goals

What are you saving money for? Keep a list of short term and long term goals to stay inspired. Short term goals should take no more than a year to achieve, like a family vacation or paying off credit card debt. Long term goals may take years to achieve, like funding your child’s education or earning your doctorate degree. Your goals may change over the years, but identifying what’s important to you will help you stay motivated.

Create a Plan

Once you’ve listed your goals, it’s time to execute a plan. With your net income and fixed expenses in mind, you’ll have a better estimate of how much you can spend each month.

Break down your expenses based on your typical spending habits, and separate your needs from your wants. You can’t achieve your goals without making a few sacrifices, so it may be time to nix your Netflix account. Gas and groceries are necessary expenses, but you can reduce your spending by carpooling or choosing less expensive grocery options. Identifying your priorities will help you decide what you really want to do with your extra spending money.

You can also pick up a second job. If you want to achieve your goals quicker or you’re afraid you don’t have the funds to cover your basic needs, a second job can help fill in the gaps. Take up a job as a server or bartender and stash the tips in a jar at home. You can also work on your own time as an Uber of Lyft driver. There are dozens of apps available that allow you to babysit, tutor, and take care of people’s pets. If you have a special skill, use it to your advantage to make some fast cash.

[contact-form][contact-field label=”Name” type=”name” required=”true” /][contact-field label=”Email” type=”email” required=”true” /][contact-field label=”Website” type=”url” /][contact-field label=”Message” type=”textarea” /][/contact-form]

Change Poor Spending Habits

After you categorize your necessary expenses, you might have some money left over. This is the money you can put away in your savings. You can deposit the full amount, or take out a small chunk to treat yourself.

If you want to splurge, take out a certain amount in cash and use only that amount when you want to take a night out or go to a movie. It’s easy to overlook how much money goes into small expenses like happy hour when you use a debit or credit card. Deposit the majority of the remaining amount into your savings so you can save.

Follow these steps, and you’ll have a budget you can stick to and achieve your goals.