April is Financial Literacy Month—but this is a skill that we should constantly be building every month of the year. We thank our partners at Bank of America and their Better Money Habits program for sharing these great tips with us.

While it might sound daunting, here are some steps that anyone can take to set a budget and stick to it.

  1. Write it down

Only 32 percent of U.S. households establish and maintain budgets, according to CreditDonkey.com. Do you know how much money you bring in every month? If you aren’t aware of the total amount, you can’t begin to manage it.

You might not think you bring in enough money now or have enough expenses to bother writing them all down, but chances are, you do. Even if your budget is simple, knowing your income and expenses is fundamental to your financial health, so get in the habit of keeping a budget—it’s an important tool to guide better money management.

After recording your income and expenses for a month or two, you can use your budget to project what your financial picture will be for the few months or a year so that you can see where your money is going, plan for upcoming expenses, find money to put away for a short- or long-term goal and figure out if you have to bring in more money or cut your spending.

Here’s a surprising statistic: Food accounts for 24% of young adult spending. Most of that is at Starbucks. Clothing and shoes is 27%; video games and electronics—15%. Do you have any idea if your spending fits any of these statistics?

You might not realize how much you are spending on that trip to Starbucks every week, or you may not think you have enough expenses to bother writing them all down, but even if your expenses are simple, try recording everything you spend money on during the day to give you an idea of where your money goes.

Begin by listing all your fixed expenses. These are regular monthly bills such as rent or a car or phone payment. It’s unlikely you’ll be able to cut back on these, but knowing how much of your monthly income they take up can be helpful.

Next list all your variable expenses—those that may change from month to month like food and entertainment. This is an area where you might find opportunities to
cut back.

Make sure to include “savings” as an item. We’ll talk about that in a minute.  f

Finally, subtract your total expenses from your total income.

  1. Make a Plan

Now that you know where you are with your finances, you can adjust your habits.

Want-to-have expenses—like entertainment, food outside of your home or the latest fashion—are the first areas to look for spending cuts. Can you skip movie night in favor of a movie at home or spend less on a gym membership? Try adjusting the numbers you’ve tracked to see how much money that frees up.

What if you cut back at Starbucks? If your usual drink and snack is $4.00 a day, and you cut out just two visits a week, you would save $8.00 a week, or $416 a year.

Do you go to the movies and grab a pizza with friends on the weekend? Suppose you gave up two movies a month and watched Netflix at home with your friends. That could save you $18 a month in movie tickets and another $6.00 or so in pizza—another $288 for the year.

Snacks out of a machine…$1.25 day, instead try a $.65 apple from home, it could save you $3 a week. Maybe that doesn’t seem like a lot, but if you did that for a year, you would have another $156.

These three easy changes add up to over $800 a year.

Then, once you’ve adjusted your spending on wants, look at your spending on needs. You may need your car, but can you drive it less frequently to cut back on gas? Can you reduce the data plan on your phone? On close inspection, a “need” may just be a “hard to part with.”

  1. Set Goals

We all have goals, things we would like to have or experience in the future. You might have a short-term goal—something that takes less than a year to save for—like buying a new gaming console, cell phone or a special evening out. Or you have a mid-term goal, like taking a trip for spring break or making a down payment on a new car.

Another important reason to save is to prepare for an unexpected emergency, like a car repair, or if you lose your job. Knowing you have money in the bank to cover expenses you did not prepare for can help you feel confident you can meet your monthly obligations.

With your budget in place you know how much extra money you have each month to put toward your financial goals (or how much you need to adjust).

With a savings goal in mind, you can develop a savings plan. Those with a plan are more likely to spend less than they earn and save the difference than those without a plan. Figure out what your goal costs, then what amount you can save for it each month, and determine the number of months you need to reach your goal. Make it realistic, attainable, and measurable.

  1. Make it work

Use direct deposit for your paycheck and set automatic transfers to move money into your savings account automatically.

  1. Get Accountable

Now that you have a budget and a plan to change your spending habits, find someone in your life who will help you stick to your plan. Just like any big change, you’re going to need someone to help you to stay on track like a mentor, parent or other trusted friends. Ask this person to check in with you on your progress, and provide you with nonjudgmental support as you try to stick to your budget and reach your goals.

You can find more helpful money tips, videos and articles at www.bettermoneyhabits.com