There are certain steps we all need to take on the road to being financially responsible adults. And while saving money and avoiding debt are certainly up there, for 79% of Americans, being financially responsible means sticking to a budget and never deviating from it, according to a recent study from Northwestern Mutual.

Here's the problem, though: Most Americans don't follow a budget. Only 41% of U.S. adults stick to some sort of budget despite the fact that it's one of the most effective means of tracking expenses and keeping spending in check.

Man and woman at table; man has calculator in front of him while woman takes notes.


The reason? It might boil down to a glaring misconception about budgeting: that it's too time-consuming for the average American. In reality, setting up a budget can take as little as an hour, and maintaining one can entail 20 minutes or less each month. Another barrier to budgeting? Not knowing how to set one up. The good news, however, is that budgeting doesn't require fancy tools. If you have access to a basic spreadsheet, you can set up a budget that's easy to follow. Here's how.

Step 1: List your ongoing monthly expenses

The first step in creating a budget involves listing your recurring monthly expenses. To this end, you'll want to comb through your bank and credit card statements to see what you've been spending money on, and how much. Guessing at those figures won't do you much good, so aim to get a solid average monthly spend for each category your money goes to.

Step 2: Factor in one-time expenses

There are some expenses you face every month, and then there are those that pop up only once a year, like your roadside assistance plan or warehouse club renewal. Forgetting about those one-time bills, however, can throw your budget off course, so once again, you'll need to carefully review your bank and credit card statements, identify those random charges, and integrate them into your budget. If you have a professional license whose renewal fee is $300 a year, you can allocate $25 a month to that expense to avoid having it catch you off-guard when it comes due.

Step 3: Compare what you spend to what you earn

Ideally, your spending should be such that you're able to save a good 15% to 20% of your earnings -- first for emergencies and then for retirement. Once you've figured out how much you spend on a monthly basis, compare that figure to what your paychecks give you, and see if it's possible to meet that target. If not, you'll need to move on to the next step.

Step 4: Cut corners as needed

If you find that you're spending so much each month that there's little to no room for savings, you'll need to make adjustments to your budget to ensure that you're not going overboard. Once you have that budget mapped out, take a look at your different expense categories, see which are the most flexible, and make changes there. For example, you have no choice but to make your student loan payments, but you can cut back on restaurant meals, cable, and your gym membership if you're not saving enough at present.

Step 5: Review your budget every month

Your budget isn't the sort of thing you should set and forget. If you're new to budgeting, carve out about 15 to 20 minutes each month to review your spending and make sure you're staying on course. If not, you'll need to keep making adjustments until your spending reaches a healthier level.

And there you have it: Budgeting doesn't need to take hours, and you don't need to be a numbers wiz to do it. So if you agree that it's an important step toward being financially responsible, pledge to budget this year. You'll be thankful for it when your spending decreases and your savings naturally improve.