RAYMOND, Miss. -- The first step to achieving financial fitness is creating a budget, but that first step can be hard to take.

“Typically, people shy away from making a budget because it is one more thing to do, and it reminds us of all the things we would like but don’t have the money for,” said Becky Smith, director of the Mississippi State University Extension Center for Economic Education and Financial Literacy.

“But making a budget can be a useful tool which helps us get closer to getting the experiences and things we want in a way that doesn’t put us in debt,” Smith said.

Begin by taking inventory of how much money is coming in and how much money is spent. This can be done with a piece of paper and a pencil or a budgeting template in a computer program, such as Excel.

Other specialized tools also can be used. Smith recommends the budgeting worksheet in Extension Publication M1471, “Healthy, Wealthy, and Wise: Budgeting,” as well as the month-at-a-glance cash flow budget worksheet in the Consumer Financial Protection Bureau’s “Your Money, Your Goals: A Financial Empowerment Toolkit.” Find the Extension worksheet at https://bit.ly/3ooNXOR and the bureau’s worksheet at https://bit.ly/34cqSrV.

When recording spending, be sure to include everyday purchases, not just fixed monthly bills. Write down everything, from a morning coffee to meals eaten at restaurants.

“Tracking our expenses can be overwhelming because we make so many purchases,” Smith said. “But the longer one tracks where their money goes, the more accurate a budget can be. Even tracking for a week can give someone a lot of insight.”

Once the tracking period is complete, follow these steps to formulate a monthly budget:

• Write down monthly net income. This is the money available after taxes and other deductions are removed from a paycheck.
• Write down monthly expenses. This includes fixed expenses and flexible expenses. Fixed expenses include items like housing, car payments, subscription streaming services, etc. Flexible expenses consist of items that fluctuate from month to month, like food, clothing, personal care, and most daily expenses.
• Write down periodic expenses. These are items like property taxes, car tags and car maintenance. If the money is hard to come up with when these bills roll around, determine how much these items cost per year. Then, take the total cost of these items and divide it by 12. Put that amount into a savings account every month.
• Subtract your monthly expenses from your monthly net income. This number may indicate a need to adjust spending and help determine how much.

Once a budget is made, it is time to make a saving plan. Having an emergency fund is critical for those unexpected and unplanned expenses, said Pamela Redwine, an Extension family and consumer science agent in Yalobusha County.

“You could have a water line break, an unexpected dentist visit, get sick and not be able to work, or lose your job,” she said. “Having money in savings to cover these kinds of expenses and life events can relieve you of a lot of worry and stress when things like this happen.”

A savings account is a good way to ensure funds are available to pay for periodic expenses, such as property taxes, automobile maintenance and auto and home insurance.

“Maybe you have bills that only occur a couple of times a year, but you need to save money every month to be able to afford these bills,” Redwine said. “Savings accounts are also a good way to save for things like a child’s college education, a vacation or Christmas gifts.”

Deciding how much to save depends on the item being saved for and how soon the money is needed.

“A general rule is to save at least 20% of your take home pay,” Redwine said. “One thing that really works for me is to have the money automatically withdrawn from my account and put in my savings account. That way I don’t have to remember to do it each month, and I don’t have to decide if I really have the money to save because it is a line item in my budget. I treat that money like a monthly expense.”

If saving 20% is not realistic, it is okay to start with a lower percentage of income, such as 10%. There are several strategies for saving, and the goal is to take some step toward saving. Determine how much you can save, and always pay yourself first before paying bills or making other purchases.

While the envelope system is a popular way for beginners to save, Redwine recommends opening a savings, checking or money market account with a reputable banking institution that offers accounts insured by the Federal Deposit Insurance Corporation, or FDIC.

“A bank account is more secure and less tempting when you need a little extra cash,” she said.

Small, everyday purchases can add up fast, and Smith recommends examining these closely if the spend category of the budget needs adjusting.

“Determine how much a month or year the little pleasure is costing,” she said. “Spending $10 three times a week costs over $1,500 a year. Ask yourself, ‘Is that the best use of those funds, or is there something else that matches your values more?’ Envision yourself enjoying whatever that something else is and how you will feel when you get to experience that.

“Another strategy that can help is to ask yourself how many hours of work it will take to pay for the item you want. Then, delay buying the item by at least one day.”

However, budgets should not equal misery, Smith said.

“Some little things can make our lives a lot more enjoyable. If you love a high-end coffee and that motivates you, then, enjoy it. But if buying that coffee daily feels like too much, consider cutting back rather than cutting it out altogether.”

For more information and resources on budgets and saving, visit the Extension website at https://bit.ly/3sc28I6 and the Consumer Financial Protection Bureau website at https://bit.ly/3Gq4S9R.