It’s easy for everyday purchases like snacks, magazines, and music to get out of control if you’re not watching them carefully. Keeping your expenses as low as possible can add up to huge savings over time. For instance, let’s say bringing your lunch to work 4 days a week saves you $8 a day or $32 a week. If you invested $32 a week for 40 years at a moderate rate of return, that savings would grow to over $330,000.

The best way to take control of your money is to create a budget, also known as a spending plan. A spending plan helps you understand how much money you have and where it goes, so you can prioritize expenses and set objectives to achieve your short- and long-term financial goals.

Managing money the right way is all about making choices and sacrifices—like whether to spend money on a night out with friends or save it to buy a car. You’ll always have many needs and wants competing for your limited financial resources. You can apply an economic mindset to your financial planning too! It’s up to you to choose your priorities and decide the best way to spend your money.

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Knowing exactly how much you have to spend and where you spend it gives you power over your finances. You can keep track of your financial information on paper, using a computer spreadsheet or a mobile app, or by importing transactions from your bank or credit card accounts into a financial program like Quicken.

Here are four easy steps to creating a successful spending plan:

Step #1—Enter your net monthly income.

To stay in control of your money and reach your financial goals, you must know how much money you have coming in each month. Recall that net income, or take-home pay, is the amount you have left after taxes and other voluntary workplace deductions. Enter this amount at the top of your spending plan because it’s what you actually have to spend each month.

Step #2—Enter your fixed and variable expenses.

Many people don’t achieve financial success because they spend money carelessly. It’s critical that you keep a close watch on your spending so it never exceeds your net income. Enter all your expenses below your income.

Fixed expenses don’t change from month to month and may include your rent, insurance, phone, or a loan payment. Variable expenses can change each month or are discretionary, like dining out, transportation, or buying clothes.

Organize your expenses into major categories—such as rent, insurance, groceries, dining out, clothes, and entertainment—and enter the total amounts.

Step #3—Compare your income and expenses.

When you compare your total take-home pay to your total expenses, you may be pleased that you have money left over or be disappointed that there’s none to spare. Discretionary income is the amount of money you have left over each month after all your essential living expenses are paid.

You must spend less than you make in order to have enough discretionary income to save and invest for your future. Living paycheck to paycheck may satisfy immediate wants and needs, but it won’t empower you to achieve long-term financial success.

Step #4—Set priorities and make changes.

The final step is to create new spending guidelines. Decide how much you want to allocate toward each of your short- and long-term financial goals and enter them as separate categories in your spending plan. You may need to reduce spending in other categories or find ways to earn extra income to cover all your expenses.

It’s up to you to figure out the best way to balance your spending and saving so you enjoy life today and put away enough money for a safe and secure tomorrow.