Money management habits are not genetically inherited, they are learned.

It may seem like some people are “just good at that kind of thing,” but that simply means they were taught the skills at a young age and developed good habits.

With a little practice, you can be just as good at managing your own finances.

Budgeting is not punishment

If you spend the first week of every month worrying about how to pay your bills, chances are you need to create a budget. Many people see budgeting as punishment for excessive spending, but a budget is not a sign of financial failure. Millionaires follow budgets just like everyone else – in fact, good budgeting habits are often how they got rich in the first place!

In reality, a budget is just a record of your spending goals and your spending reality. If you feel like you don’t know where your money goes every month, a budget will tell you. If you have trouble meeting goals like adding to a savings account every month, a budget will help you prioritize your spending to meet those goals.

Tracking expenses

The first step to making a budget is writing down everything you think you spend in a month. Start with a list of monthly bills, then add items such as gas, groceries, restaurants, and so forth. Review your bank account records or make an educated guess about what you spend each month in each area. Note the amounts you consider reasonable, and those you expect to cut back on.

Once you have your estimated expenses written down, it’s time for a reality check. For the next month, keep track of everything you spend. No matter how small the expense, it’s important to be meticulous. At the end of the month, you have a real-world comparison for your estimates.

As you compare your real expenses to your estimates, you may find you are spending more than you ever imagined in some areas. You will also discover what you missed. Your sister’s birthday present will remind you to create a “gifts” section, and getting your oil changed will suggest a “car repair” category.

Setting goals

Once you know where your money has been going, you are ready to make decisions about where you want your money to go in the future.

List your goals for your money. Do you want to save for a home? Are you trying to get out of debt or boost your savings? Your expense tracking list will show you how much money will be available to put toward these goals after bills and expenses. If the answer is, “not enough,” it’s time to cut back.

Where to cut back

Create a budget based on your tracked expenses and your listed goals. If you want to put more money toward savings or another financial goal, analyze your expense tracking list to see where you can cut back.

Can you take your lunch to work a few days a week instead of eating out every day? Can you try to negotiate a cheaper rate with a service provider to spend less on your cable or phone bill? Do you use your gym membership or can you cancel it and use your apartment’s workout facilities? Figure out what lifestyle changes you can make to ensure your money is being spent in the right places.

Once your budget is complete, put it into practice. Continue to keep track of your expenses, and every week compare what you’re spending to your budget to make sure you are on track. If you have veered off course due to an oversight or an unexpected expenditure, you may have to make adjustments next week to compensate.

Also, you may find you need to tweak your budget plan. Was your initial budget unrealistic or too restrictive? If your current budget does not work, keep a adjusting it until you find what works for you.

Remember, following a budget is not punishment for poor money management, it’s a tool for effective money management. Large companies employ entire departments for accounting purposes. Your own financial security is just as important, and if you stick with your budget, you will start to see results.