No matter what your level of income, a budget for your earnings and expenses is one of the most useful financial tools you can use.

The benefits of budgeting are numerous. A budget can help with lowering debt and paying off loans, saving for college or retirement, putting aside funds for large purchases (a car, vacation or home), reducing impulse buying, or easing the pressure of living paycheck to paycheck.

What is a personal budget?

A personal budget is a monthly record that tracks everything you earn and spend. It can help you decide where to put your money, set limits on how much to spend and ensure you have enough to cover the essentials. A budget’s ability to reveal spending patterns can serve as a roadmap to your money’s future, showing where you might cut costs, save more or spend at a later date.

There are a number of budgeting methods you can use. These include the traditional (or line-item), 50/30/20, zero-based, value-based and cash-envelope budget methods. Each has its strengths and weaknesses, depending on your financial goals and the time and attention you have available.

What kind of budget is best for you?

If you’re new to budgeting, it might be a good idea to start with something basic, such as the 50/30/20 method, which divides all your expenditures into percentages: 50% for needs, 30% for wants and 20% for savings. As your skills and confidence grow, you can work toward a more complex method, such as zero-based budgeting, which will require more hands-on attention.

Another way to choose how to budget is by asking yourself if you want to solve a problem or achieve a goal. Some budgets work better for one than the other. For example, 50/30/20 budgeting is good if your goal is to save on a regular basis, while the zero-based method is great for those who want to take control of their spending and already have a clear idea of where they want their money to go.

Where to start?

Creating a personal budget may seem intimidating, but there are countless tools that can help get you started, from basic spreadsheets like Excel to budgeting software and apps like Quicken and Mint. You can also talk to your financial institution about any tools they might offer.

By far, the hardest part will be settling on a system that works for you and gathering the financial data you’ll need to get started (some methods require more detail than others). But once that’s done, your main task will be reviewing your expenditures on a regular basis (at least monthly), seeing how they align with your spending plans or goals, and making any adjustments.

Planning and consistency are key. Once you’ve made the budget, it’s important to stick to it. The results of that extra vigilance will pay off in increased financial health for years to come.