Now that you understand just how much you have actually made from your hard work by decoding your paycheck let’s talk about making a budget. A budget is a plan for earning and spending and is helpful because it allows you to plan for future expenditures (spending) while also considering day-to-day spending.

To make a budget, follow these 5 simple steps:

1. Keep track of and add up all your total monthly income (the money you receive, whether it be a paycheck, a gift or another form of payment).
2. Keep track of and add up all your planned expenses (anything that you spend money on) for the month. An expense is anything from paying rent, buying groceries, going to the movie theater, paying phone bills or even the overpriced-but-worth-it pumpkin spice latte that you get every Monday morning.
3. Subtract your expenses from your income. This will give you the money you will have left over after paying all of your expected expenses. This number should be a positive number; if it is not, look at your expenses and consider eliminating some of them. For example, sipping that pumpkin spice latte every Monday may not seem as though it’d have a big impact on your finances, but skipping out on a $5 coffee every week will save you $20 each month! Still seems small? Think about this — skip the lattes for a year and you will have saved $240!
4. Once you calculate the cash left over after covering your expenses, create a savings pace. It is recommended that 10% of your total monthly income be put directly into a savings account or investment. It is also recommended that you put a set amount of money into your savings account from month to month.
5. Now you have your budget! All that is left is to follow it! It may be hard to stick to your budget, but know that even small moments of saving now add up to large amounts money over time.