Most people know they need a household budget. But when it comes time to create one – and then stick to it – it can be tough to get started.

Whether you’re building a budget for the first time or simply need a refresher course, here’s a step-by-step guide to get you started:

Step 1: Organize. At its core, a budget is a worksheet with two columns: one for income and one for expenses. So, you’ll need to gather your financial documents, such as pay stubs, credit card and bank account statements, and auto or student loan bills, to ensure you have enough information to begin tracking the money coming in and going out.

Step 2: Track. For one month, keep a detailed log of all your spending habits. Track all your expenses, from big ticket items, such as car, rent, mortgage, or credit card payments down to the amount you spend on daily lunches. Consider using free online tools, such as Budget Watch , to automate the process of tracking your spending and setting up budget goals.

Step 3: Analyze. At the end of the month, total your income and your expenses and then subtract your expenses from your income. If your expenses add up to less than your income, you’re on the right track. If not, examine your spending with two questions in mind: “What can I do without?” and “What’s really important?”

Step 4: React. After looking at all of your expenses, separate them into categories and set a budget for each. If you think you spend too much in a given area, set a goal that will require you to actively cut back. To save for the future, aim for a monthly spending total that’s only 60 percent of your gross income. This doesn’t mean you’ll be able to start saving 40 percent of your income overnight – it can take years to build to that number. But if you create a budget with a goal in mind, you can begin to move your finances in that direction.

Step 5: Review: Make a habit of reviewing your budget every month, particularly in the early stages. It’s also helpful to get a qualified second opinion. That might come from a trusted friend or relative who’s skillful with spending, savings, and investing. It could also come from an experienced financial planning professional who can review your budget, offer suggestions and help answer questions. And be sure to back up everything you hear with your own research.

 Tip 

To save for the future, aim for a monthly spending total that’s only 60 percent of your gross income.

There will be emergencies and events that may divert you off your target every once in awhile. But if you make budgeting a lifetime habit, you’ll have the tools you need to adjust your spending and get back on track.

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If your expenses add up to more than your income, you're on the right track.

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