I know. No one wants to talk about it. The dreaded “B” word. But before you roll your eyes and click away, give the little buddy a chance. Like your mom always says, “you never know until you try it.”

First, figure out your take home pay

We’re starting with something easy! Look at how much is deposited into your checking account each month after all deductions and taxes have been taken out. If you receive irregular income such as quarterly bonuses or annual commissions, average these out to get the monthly average throughout the year.

Apply the 50/30/20 rule

Whoa! Hold up! I know that was a lot of numbers to throw at you, but look, they just equal 100. It’s all good. Here’s what the numbers mean- allow up to 50% of your income for needs, 30% for wants, and 20% for savings and debt repayment.

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Every dollar you take home each month should be assigned to one of these three categories. If every dollar has a category, you’ll eliminate the feeling that you have extra money burning a hole in your pocket.

Make sure to include the less frequent expenses like annual car registration, occasional oil changes, annual travel, or holiday gifting. I find it easiest to average these out monthly as well. Setting aside money for these less frequent expenses on a monthly basis, means you’re prepared when those expenses occur.

Lastly, track your spending

I know this is that part everyone hates. Hey, I didn’t want to admit that I spent 2% of my monthly income on eating at Raising Cane’s, but I did. And now I need to 𝗀̶𝗈̶ ̶𝗈̶𝗇̶ ̶𝖺̶ ̶𝖽̶𝗂̶𝖾̶𝗍̶ decide if that’s how I want to spend my income, or if I should cut back and put that to better use.

The hardest expenses to track are those in the variable spending category (groceries, dining out, shopping, entertainment etc). If you’re having trouble tracking these expenses and staying in your monthly budget, try utilizing the “one account” method. Set a monthly budget for all these expenses combined, and set up a separate account which you will fund with your monthly budget for this spending. Use this account to cover these expenses and keep an eye on it throughout the month. When the funds are gone, they’re gone! Try to plan ahead for the month. Knowing how long that money needs to last will help you make more informed spending decisions.

If this doesn’t work and you're struggling to accurately budget for these items, you can try calculating your daily budget for these expenses (monthly budget divided by 31 days in the month). If you have a daily budget for variable expenses of $30/day, keep a journal and mark down every day you stay under your daily budget. Sometimes you’ll need to go over your daily budget, and spend less other days. But the act of checking off the days you reach your goal helps to create better spending habits.

Whether you’re a “big picture” type of person or someone who meticulously categorizes every transaction, setting sustainable spending habits and working up to saving 20% of your income will get you started on the right path towards retirement some day.