(MC) — Successful financial plans often begin with the creation of a budget. 

A budget is an estimate of income and expenses in a given period of time. Budgets help with long-term goals like paying off a mortgage or sending a child to college as well as short-term goals like financing a dream vacation.

Not all budgets are alike, and when people hear the word “budget,” they may get apprehensive. Budgeting may require making some concessions in regard to spending habits, but it doesn’t have to put a complete damper on plans. In fact, with a budget in hand, people may be more free to spend because they will have a stronger grasp of their financial situation. 

Making a realistic budget does not have to be a chore. Here is how to get started.

• List the necessities. Begin by calculating the costs associated with fixed needs, including rent/mortgage, utilities, food, and any other bills you have to pay each month.

• Add existing debt. Debt includes any routine payments being made to credit card companies, student loan lenders, car payments, or unpaid medical bills. 

• Conduct a spending analysis over several months. Budgets are easier with fixed numbers, but unforeseen variables can affect spending every month. These can include the extras for clothing, entertainment and much more. Average the cost of these expenses throughout your analysis period so you can get some idea of how much to allocate for them.

• Use software or apps to help. There are plenty of resources available to help people calculate their budgets and get a picture of their financial habits. Resources such as Mint, YNAB (You Need a Budget) and various accounting programs can produce spreadsheets, pie charts and bar graphs as you work to create a budget.

• Start trimming gradually. Quitting a certain lifestyle cold turkey can be jarring. Gradually cut back on your spending if your analysis suggests that’s the way to go.

• Automate saving. Immediately removing a set amount from your paychecks by having it directly deposited into a separate account can remove the temptation of spending too much from your financial equation.

Budgets are a key part of a financial plan and can help people reach their goals.