5 tips for creating a budget to support your financial goals

NEW YORK (AP) — Whether you want to pay off debt, start a rainy day fund or save for a family trip, budgeting is the first step toward reaching your financial goals.

Creating a budget is much like trying to eat better or exercise more — everyone tells you it’s good for you, but it’s hard to get into the habit, said Colleen McCreary, consumer financial advocate at Credit Karma.

“A lot of people think it’s over-complicated and a hard thing to do," McCreary said. “Much like going to the gym, the hardest part is showing up, so you just have to decide that you’re going to try it out.”

Here are five important steps when you're ready to create a budget:

1. WRITE IT DOWN

Writing down all of your expenses is key, said Elena Pelayo, educator at How Money Works, a financial literacy organization.

She suggests recording every penny that you spend rather than trying to approximate, which can lead to errors.

Pelayo recommends using whatever method fits you best, whether that's writing it down on paper, creating an Excel spreadsheet or using a website.

Next, she recommends categorizing where your income should be spent. Always start off with covering your basic needs.

A well-known budgeting system is the 50/30/20 rule, where 50% of your income is allocated for necessities like food and rent, 30% for things you want, and 20% for savings and debt repayment.

Wiltrice Rogers of Allen Park, Michigan, has used this system for more than 30 years.

“It helped me to see how beneficial it is, and that we have more discretionary funds when I follow this method,” said Rogers, an intake coordinator for a nonprofit organization.

Websites such as NerdWallet or Money Fit offer 50/30/20 calculators to help.

This method works for many people, but it...