There's something to be said about knowing exactly where your money goes month after month. But unless you have a budget, you're apt to have a hard time understanding where your cash seems to disappear to on a regular basis.

The good news is that in a recent survey of 1,000 respondents of all ages conducted by Comet, 74% said they follow a budget. That includes roughly 68% of adults earning over $100,000 and 78% of folks with incomes between $20,001 and $35,000.

When asked why they took the initiative to create a budget, most respondents said that having one would help them avoid needless spending or build emergency savings. And that's reason enough to give budgeting a try if you've never done it before. Here's how.

Couple sitting on a couch in front of a laptop, holding documents.


1. List your recurring monthly expenses

A big reason to budget is to understand where you're spending wisely versus wastefully. To that end, you'll need to start by figuring out how much you spend each month, on average, on all of your expenses, from major ones like your rent and car payment to minor ones like your morning coffees and dry cleaning.

But don't just guess at those numbers. Comb through your bank and credit card statements from the past year and see how much you've actually been spending on things like groceries, restaurants, and rideshares -- expenses that can vary from month to month, but that you need a handle on nonetheless.

2. Factor in one-time expenses

We all have those things we spend money on every month, like cable and cellphone service. But then there are those bills that creep up on us out of nowhere, like warehouse club or professional license renewals. A big reason why it's so important to review your past year's expenses when establishing your budget is that in doing so, you'll be reminded of those one-time bills. This way, you'll be able to add them into your budget to avoid surprises.

For example, if you typically spend $150 once a year on your roadside-assistance plan, you'll know to budget $12.50 a month for it so you're not stressed when the total is due.

3. Compare your total monthly spending to your monthly income

Ideally, your spending should be such that you're able to save a minimum of 15% of your earnings month after month. If, after tallying up your expenses, you find that you're not able to set aside that much on a regular basis, or worse yet, that you're maxing out your paychecks entirely, you'll know that it's time to start cutting corners. The good news is that once you have your budget, you'll be in a prime position to know which expenses are easiest to slash.

Let's imagine you run the numbers and determine that you'd like to be saving $300 more a month than you're banking at present. You might choose to downsize your living space to free up that cash. That way, you get to keep spending money on the smaller luxuries that make you happy, like leisure and takeout meals.

On the other hand, if the idea of moving is too daunting, you could instead stay put and cut a series of smaller expenses. The choice is yours, but the decision will be easier to make once you see those numbers lined up in front of you.

If you're living without a budget, you're doing your financial life a disservice. Rather than continue on that road, carve out an hour or two this weekend to set up a budget, and then pledge to stick to it. You'll be thankful you did.