Between skyrocketing prices, increasing interest rates, and growing rumors of a possible recession, it’s time to take charge of your finances. Whether you’re looking to grow your emergency savings or begin investing to diversify your income, creating a budget is the best way to get started on your journey to financial wellness.

Creating a budget can be a game-changing strategy to help you meet your financial goals. Below are six simple steps to create one.

Calculate your income

Understanding how much money you bring into your household is essential when creating a budget. It sets the foundation and, when done correctly, helps create boundaries and spending limits. Earnings from full-time jobs, freelance gigs, and side-hustle revenues are part of your income.

Sum up your spending

Now that you’ve calculated your income, it’s time to determine your spending. If you pay for most expenses on a card, these charges should be easy to identify. Log into your online account and filter through your spending history. I like to sum up my expenses monthly, so it’s easy to understand how much money I spend in a specific timeframe.

Categorize your expenses

Browsing through charges can be overwhelming, especially when you don’t understand what expenses are necessities versus which ones are indulgences. Take the time to divide your expenses by category. These categories can include groupings like groceries/food, home/shelter, auto, etc. By sorting your expenses, you can get a bird’s eye view of where you are spending your money and where you can improve.

Identify areas of opportunity

The next step is to identify areas of opportunity. Now that you know how much money you are making and spending each month, it’s time to look for ways to cut back. Sure, maybe there’s not much you can do to adjust your mortgage, but can you shop around for a better auto insurance rate? Can you cut back on your eating out spending by cooking more meals at home?

Generate goals

The areas of opportunity you identified from the task above make great goals. Whether you want to challenge yourself to pay off your car loan by the end of the year or plan on limiting yourself to only buying coffee once a week for a month, create goals that are meaningful to you. Remember to establish realistic goals. These will help you build momentum and stay consistent with your work toward a better financial future.

Review regularly

As with any big project, consistency is crucial to success. The budget and goals you create are just some sheets with numbers unless you dedicate the time and energy to establishing tangible change. Schedule reoccurring money dates to check in on your progress. During this time, make any necessary updates and review your goals.