Achieving a big financial goal, whether it’s buying your first car, saving for a down payment or even setting aside money for retirement can seem impossible. The secret? Making a budget and saving money one month at a time. But where do you start? Here are 5 simple steps that can set you on the right path:

Start with monthly income

The first thing you’ll need is your monthly net income, sometimes referred to as “take home pay." This is what you make after things like taxes or retirement contributions. This income could be from full-time and part-time jobs, child support and alimony, retirement income or self-employment. If you are self-employed, remember your income has yet to be taxed. You should work with an accountant to understand how much to set aside for taxes and estimate your net income.

Write down monthly expenses

Start with the big ones and move down the line. Remember to include housing costs, like a mortgage or rent, car loans and insurance and student or medical debt. You should also include credit card payments, child support or anything else you’d find on your credit report. (Not monitoring your credit? You should be and you can do it for free!). Make a list of your monthly utility bills, grocery receipts, entertainment or dining expenses and those pesky subscription services. Don’t forget about any child care or even pet costs. You want to be thorough so you don’t have surprises later on.

Create a budget

Try to fit all your expenses into buckets and set limits on spending for each. It’s also important to categorize expenses into needs and wants. While rent and utilities are often fixed costs we can’t do without, expenses like entertainment, travel and dining budgets offer room to trim. The best budgets are also the most honest. Could you trade that lease in for a used car and save? Be critical of your expenses. This way you’ll understand where to cut back for additional savings down the road.

Now subtract your monthly expenses from your net income and voila, money left over to begin saving.

Set your savings goals

Goals are important. They give us targets to hit and make saving fun as you envision that new car, home or tropical vacation. A good rule of thumb is to begin saving 10-15% of the net income we calculated earlier. If the result of subtracting your monthly expenses from your net income is smaller than you’d like, or worse, negative - it’s time to go back and review those buckets. Where can you cut back? Another benefit of savings goals is that you’ll know exactly how much you need to cut back to reach your targets.

Start tracking and make adjustments

Give yourself a few months to monitor your progress and ensure your expenses and income are in line with previous estimates and monitor those expense buckets. If you are routinely exceeding the limits you set you may need to adjust habits or perhaps reallocate money from one bucket to another. Can’t cut back on bars and restaurants? See if you can get by spending less on streaming or subscription services and keep your budget intact.

One important note: be mindful of any restrictions on your savings. If you’re just looking to soak up the sun on vacation, you can break that piggy bank and trade the beach for a public park come summer time. But if you’re setting aside money for retirement, those funds aren’t so easily accessed if your budget starts to break down. Be conservative and constantly evaluate the health of your finances. You can always increase your savings later on.

Bonus tips:

• Watch out for lifestyle creep. If you’re young, as you advance in a career and make more money, expenses that once seemed like luxuries can quickly become necessities. One strategy to avoid this phenomenon is to set aside a significant portion of any pay increase directly into savings. That way money won’t be available to flood into any budget bucket.
• Avoid impulse spending. Do you really need that $500 stand mixer or $1,000 smoker? No one is asking you to live like a 16th century monk, but before you invest in a new hobby give yourself some time to think. You may forget all about it, or find a more cost-effective purchase where you can put the money you’ve saved toward your long-term goals.
• Get some yield. Instead of letting savings sit in a checking account, look out for high-interest savings accounts for certificates of deposit. It’s an easy and safe way for your money to work for you.