Today, nearly half of Americans live paycheck-to-paycheck. Depending on a slim income to make ends meet is challenging—but creating a monthly budget can help.

Budgets let you track where your money goes and when bills are due. They also help you plan how much money to put towards savings and paying down debt. 

Financial planning doesn’t have to be hard. Keeping the budgeting process simple is key to staying on top of it.

The 50-30-20 budget is a great place to start. 

By spending 50 percent of your monthly income on needs, 30 percent on wants, and 20 percent on savings, you can create a responsible budget that works for you.

Follow these four steps to create a monthly budget that works for you and your personal financial goals.

Step 1: Monthly Income

Start by looking at your take-home income—your after-tax money. 

For some people, figuring out monthly income means looking at one or two paystubs. If you’re a U.S. gig economy worker or freelancer, there are some extra steps.

For gig workers, take an average monthly income for your last quarter of work. That will give you a good estimate for future pay. 

For freelancers, you may need to check averages for each client and take into account varying workloads.

Remember, to take into account all income. 

Other common incomes include:

After figuring out your monthly income, you’re onto step two.

Step 2: Monthly Expenses

Expenses come next. Success here is usually about self-control. 

Write down all your monthly expenses. Be honest with yourself. For your budget to work, you need to know exactly where your money goes.

Most of us don’t keep receipts. Don’t panic. Use your bank statement. Most banks have a mobile app that will let you view your statement within seconds of logging in.

Go through your statement and create a category for each major expense type. Try to keep them simple and straightforward the first time around. 

Common expense categories include:

Once every dollar is accounted for, it’s time to plan.

Step 3: Create a plan

This is where it all comes together. 

Look at your monthly income, then your expenses. Where does most of your money go?

The largest expense categories are usually your most important. Start there. 

Let’s try the 50-30-20 budget. Start by halving your monthly income. 

That first half should go to your needs—food, housing, utilities, and transportation. This does not include entertainment.

From the second half, 30 percent can go to your wants. This can be entertainment like TV and concerts, items like clothes or furniture, or luxuries like eating out and beauty care. The last 20 percent should go into your savings account. 

Keep in mind that the 50-30-20 budget is a reach goal for most of us.

If you’re not able to save 20 percent of your monthly income, don’t panic and keep working on your monthly budget. 

See if you can inch your monthly savings up little by little. If you’re saving none of your monthly income before, start by saving just $10 or $50 a month. Any amount is a start to be proud of.

The important part is to keep your spending on wants as low as possible. 

Step 4: Track Spending

After you have a working budget in place, track your spending each month. Remember, bank statements are your friend. 

When an expense hits your account, put it into an expense category. At the end of the month, you can see how well you kept up with your budget. Where did you keep to your budget? Where did you overspend? Then, adjust.

Simple as that.

What’s Next?

Now you know how to create a monthly budget. Making one is simple, but keeping up with it can be tough. Don’t get discouraged. Every step in the right direction is a step worth celebrating. 

Try to get a little better each month and forgive yourself for slip-ups. 

The trick is creating a budget that’s actionable and works for you. Remember, every dollar counts!