It’s a daunting task to start: creating your budget. 

You’ve heard of many other people sticking to a budget and thriving off of them, but how in the world do you go from not tracking your spending at all, to having a complex financial spreadsheet? It doesn’t have to be complex! Here’s a three-step guide on how to start wading into the waters of budgeting.

1. Start tracking your spending

Before you even start creating a budget and allocating your income/expenses, take a pay period (whether that’s two weeks or a month) and simply keep track of all your transactions. This can be a list on your phone, an excel sheet on your computer, or even a hand-written note. By writing down all the items you spend money on, you’re able to practically see where you spend the most and set the foundation for what kind of budget would work best for you.

2. Create financial goals

Are you in the middle of paying off student loans? Wanting to put a down payment on your first home? Establish three financial goals you would like to achieve over a period that is timely, but realistic to your current situation. Creating goals will help motivate your decision to create, and stick to a budget in the future!

3. Categorize the areas you spend the most money

If after a month of tracking your expenses, you find that the majority of your money goes toward dining out, monthly subscriptions, and utilities, identify which categories are necessary to continue to spend the same amount on and which can be cut back. (We hope utilities make it to the top of your necessary list!) By identifying the different places your money goes, you’ll have a good understanding of how you need to budget to meet the goals you set up in step number two.

Starting a new budget is no small task, but starting to identify how you handle your money will help pave the way to a successful and long-lasting budget mentality!