Creating a budget can be an overwhelming experience. Whether you are looking to start a personal budget or get a better grasp at managing your money, start with these seven steps.

1. Know how much you make. The first step in forming a budget is to calculate your income. Take a pencil and paper and write down your net income for the month. The total will be the number you should use when creating your budget.
2. Create a list of all your monthly recurring bills. Note all your fixed and variable expenses. Regular monthly bills, like mortgage or car payments, will most likely stay the same month by month. Bills that may change from month to month, like groceries or entertainment, will be a little trickier to add up. Use an average of what you have spent over the last three months, leaning towards the higher end when in doubt.
3. Add it all up. It can be helpful to keep track of your spending, so you know where adjustments can be made. Seeing what you are spending the most money on might make it easier to cut back on various expenses.
4. Set your goals. Now that you have a clear idea of how much you make, and where your money is being spent, it is time to set your financial goals. Short term goals could be anything from creating an emergency fund to paying off debt, whereas long term goals could be anything from saving for retirement to building a fund for your child’s education.
5. Make a plan. Using the information collected in steps 1-4, you should have a clear idea of your income, expenses and goals. Now it is time to plan. Decide which goal you want to start with and adjust your monthly spending accordingly.
6. Build healthy spending habits. Once you have started implementing your budget, consider adding healthy spending habits. Decide where you have money left over and where you can cut back. Put these additional funds towards your goals.
7. Monitor and adjust. Be sure to monitor and adjust your budget with any small or little change. Keeping the numbers as close to accurate as possible could get you the best results.

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