Many people think about creating a budget, but the thought of actually putting one together can appear daunting. I can tell you it’s really not that hard. Here are 5 tips to get you started on a basic budget plan:

1. Begin with You in mind. That’s right, what is important to you? What do you value? Take a look beyond the basic values (family, friends, etc.) and begin to identify and prioritize your air conditioning unit, cable vs. streaming, the cell phone plan, entertainment, dining out, etc. As you create a budget, spend money on the items that are most important to you and stop spending money on the items that are less valuable to you.

2. Distinguish between Needs and Wants. As basic as it sounds, understanding that food, shelter, clothing, insurance, gas, utilities, rent or mortgage (your Needs), are items that should find their way closer to the top of your list when it comes to spending. Things like a new Xbox or another pair of shoes are Wants and can be listed lower on your list.

3. Include ALL expenses. We know what our re-occurring expenses are, i.e., rent/mortgage, utilities, etc. But each year, something will come up that you were not planning on. Plan for it. Ask yourself, “when was the last time the dishwasher was replaced?” or “how old are the tires on my car?” Sometimes, these basic expenses, if missed, will be costly later if you don’t account for them now.

4. Plan a monthly budget review. Chances are, your spending habits vary from month to month. Perhaps you spend more in November and December than September and October. Each month has its own unique challenges. Take the time to think about what some of those challenges may be. The budget you create does not have to be the budget you keep.

5. Open 10 savings accounts. You read that right. Most people I talk with have at least one or two savings accounts. In my experience, when we give our dollars a purpose, we tend to spend with a purpose. Each savings account I have has a designated purpose. For example, I like to pay for my auto insurance every six months instead of making monthly payments. I opened a savings share at my credit union and called it “Auto Insurance.” Since I am paid 26 times throughout the year, I calculated the amount of my auto insurance divided over 13 pay periods. Each pay check, I have that amount automatically deposited into that account. That way, when the time comes to pay my auto insurance, I don’t have to go into debt to pay for it.