Want to fast-track your financial goals? Start by working out a personal budget to manage your cash flow.

Learning how to balance your personal budget is the first step toward achieving your financial goals, whether that’s through paying off debt, building a retirement account, or saving up for a car. Managing your cash flow wisely can put your dollars to work for you, instead of the other way around.

If you’ve never budgeted before you might be intimidated, but don’t be. By following these simple steps, you can become the master of your dollar domain.

1. Run the Numbers

Before you can create a personal budget, you must know exactly how much is coming in (your income) and how much is going out (your expenses). Total up your monthly paychecks to see how much to determine your cash flow. Then, add up your fixed monthly bills (rent/mortgage, utilities, auto loans, gym membership, cable bill, etc.). Keep these amounts handy; you’ll need them later.

2. Track Your Spending

The next part involves figuring out how much you spend on everything else beyond your fixed expenses. In order to properly budget for things like gas and transportation, groceries, recreation, personal grooming, and other entertainment, you need to pay close attention to where your money is going. This can be tricky. For one month, record every dollar you spend. Whether you use your debit card or cash, save and tally receipts. You can utilize financial apps like Mint to help you. Whichever method you choose, this exercise can be eye-opening.

3. Expect the Unexpected

There’s another important budget line item to include: savings. Allocating a certain amount of each paycheck for an emergency fund will help you build up a cushion for unexpected expenses you didn’t budget for, such as car repairs, home maintenance, or medical bills. If you can swing it, you should also set aside a smaller amount into a “For Fun” account to pay for gifts or small treats that may come up sporadically. How much you save is up to you, but every bit helps. Consider automating a transfer into your savings account(s) on payday—even as small as $10 a month—so that it comes off the top without you even noticing.

4. Create a Doable Budget

At this point, you should have four totals: income, fixed expenses, estimated monthly spending, and an amount for savings. Add up your fixed expenses, monthly spending, and savings, and then subtract that total from your income. What’s left? Is it close to zero? Would you have to borrow or use a credit card because you’re coming up short?

If you’re not coming out ahead, you’ll need to make some adjustments. In essence, you must find ways to either earn more (taking on some extra work or a side gig) or spend less (reduce your bills or live more frugally) so that you have more cash flow available. If you do have extra money, that’s great! You can reach your goal faster, whether it’s upping your savings amount or paying more toward a debt.

5. Stay on Track

Find a way to stay organized that works for you, whether it’s a spreadsheet, a budgeting app, or writing things down the old-fashioned way. For the first few months, you may have to make some tweaks until you get the hang of living within your new personal budget, but try not to stray too far. You don’t have to sacrifice everything or become an extreme couponer, but you must be willing to delay gratification or scale back your lifestyle occasionally to see significant results.

By being more mindful about where your money is going, you’ll find that budgeting is a liberating and empowering experience.

Dawn Papandrea

About the AuthorDawn Papandrea

With more than 15 years of professional writing and editing experience, my writing specialties are in personal finance, higher education, and content marketing. Publishing credits include Family Circle, Parents, WomansDay.com, CreditCards.com, BankRate.com, University Business, and many more. In addition, I also create branded content for several brands and corporations in the financial, retail, marketing, and lifestyle/parenting spaces. No matter the medium, I understands the value and power of content from both a writer's and editor's perspective.