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If you find yourself living from one paycheck to the next with little savings, it’s time to learn how to budget money.

Budgeting is an effective tool for achieving short- and long-term financial goals. Whether you’re saving for a family trip to Florida or planning to retire at 55, creating a realistic budget helps you track your progress toward your goals and adjust your savings as needed.

Here are some tips on how to budget your money to help you keep your financial goals on track.

Budgeting: An Overview

Making a budget helps you understand how and where you spend your money. Once you learn your spending patterns, you can adjust your behavior to help you save.

To get started, tally regular essential expenses such as bills, groceries and utilities, and subtract that number from your income. Divide what’s left between non-essential expenditures like entertainment or your morning cup of coffee. Examine which nonessential expenses you can cut for additional savings.

You may be tempted to start making extreme cuts to your spending, slashing all non-essential activities and eating only rice and beans for weeks. But your budget won’t be sustainable if your changes are too drastic. Be realistic about how much you can put away each month and still live comfortably. Your goal is to develop a system that allows you to save money without having to turn your life upside down.

Budgeting for short-term goals

Short-term goals can be anything from saving for a nice dinner out at the end of the week to a weekend trip to a ski resort.

To save for short-term goals, track income and expenses on a spreadsheet. List your expenses by category, such as groceries, gas and dining out. This will allow you to see where you’re spending your money and where you can cut back in order to save for a weekly or monthly goal.

Try swapping one regular, nonessential expense for another to pay for a short-term goal. For instance, if you spend $4 per day on your morning coffee before work but want to spend $80 on concert tickets later in the month, you may want to forego that morning purchase and instead brew your coffee at home.

Use Bankrate’s home budget calculator to see how to start budgeting your money.

Budgeting for long-term goals

For long-term goals such as saving for retirement, continue tracking expenses versus income and try to set aside a regular amount of money on an ongoing basis—for example, $450 each month toward funding an IRA.

Automating your savings can make this process easier. You may be able to set up an automatic deposit to your IRA on each payday. Your employer also may be able to directly deposit a portion of your paycheck into a savings account each pay cycle. Or, set up an automatic transfer from your checking to your savings each month, so you don’t see or think about spending that money.

Making direct deposits into a high-yielding savings account will help you attain your goals more quickly.

Prepare for Unforeseen Expenses

Life is full of surprises that can be expensive to address. For example, car repairs or health challenges can take a bite out of your savings and threaten to derail your goals. Build an emergency fund in a savings account to cover these types of costs. Aim to save the equivalent of at least three months worth of regular expenses to provide yourself with a good financial cushion.