It’s never too late (or too early for that matter) to start making decisions that will benefit your financial health. With so many options available and more online articles than you could ever read on the topic, choosing how to manage your money can feel daunting – especially if you’re new to it.

The key is to think of money as a tool. It’s up to you to determine your priorities and how you want to use that tool. Maybe you want to save up for your dream car, or maybe your first goal is to pay off your student loans. Regardless of your personal goals, there are a few basic steps you can take to start managing your money more effectively.

Assess your current financial situation

Just like planning a road trip, heading down a path without knowing where you are is a good way to get into trouble. A personal financial statement is a great starting point for understanding your situation. It should show:

• Your assets
  ‍This is everything you own, shown in its monetary value
• Liabilities
  ‍This is essentially your debts
• Net worth
  ‍Your net worth is calculated by deducting liabilities from assets

Using a tool like Causal’s free version gives you a place to figure out your net worth without being a spreadsheet expert, and you also get access to all of Causal’s personal finance templates to make it even easier to get your numbers right.

Another helpful exercise to do before setting goals or creating your budget is assessing your cash flow. Start by listing your income. You can either outline where your salary goes before it hits your bank account (i.e., taxes, 401k, etc.) or just use the amount you receive in your paycheck to keep things simple. Then, write down all the ways you spend money, including:

• Fixed expenses
  ‍Regularly occurring payments such as utilities, mortgage, or rent
• Variable expenses
  ‍Charges that change month to month, such as shopping, bar tabs, eating out, etc.

You can’t fix issues you aren’t aware of, so consider this process an important first step. It’s often surprising where the money goes (and how fast it goes), but don’t get discouraged. If you find that you’re overspending on clothing, for example, consider it an opportunity to scale back and use that money more wisely.

Set personal money management goals

Staying on track with your financial goals will be much easier (and more rewarding) if you have goals in mind to motivate you.

Many studies have shown that writing goals down makes you much more likely to achieve them, so consider documenting goals and keeping them in a place where you can see them. Whether that’s taped to your mirror at home or kept in the notes app on your phone, these little reminders will help you stick to your financial priorities – it might even stop you from whipping out the credit card for the next flash sale you get in your inbox or Amazon Lightning Deal.

If all of your goals are huge and feel insurmountable, you may get discouraged on your path to personal wealth. So when setting goals, set some smaller short-term goals in addition to your big “dream” goals. Small goals, such as spending less money on nights out, build confidence that gives you a little more willpower to go for bigger goals.

Remember, your goals will grow and change throughout your life. Don’t forget to look in the rearview to appreciate your progress along the way. And re-evaluate your goals once in a while to adjust to sharp turns and bumps that are bound to pop up.

Make a budget

Now that you’ve set goals, it’s time to make the plan that will help you reach them: Your budget.

Look for places areas where you can cut spending to achieve your goals faster. By the way, Causal is a great way to look at all of your financial variables in one place and build a budget that is both lean and easy to follow.

Maybe you’re currently paying for multiple streaming services that you could instead split with a family member or friend (or cancel if you’re up for it). It may be difficult at first, but seeing your emergency fund grow and your debt shrink will make it all worthwhile in the end.

Make sure your budget is realistic and allows room for things you enjoy. For example, if you love visiting new restaurants, you’re not likely to stick to a budget that requires you to eat every single meal at home. However, maybe it’s realistic for you to make meals at home throughout the week and try new restaurants on the weekend.

Plan for the Future

Financial health is all about balancing your current lifestyle with planning for the future.

No one likes to think about their basement flooding or getting older and having more healthcare needs, but it’s important to stash a little bit in the piggy bank before an emergency or retirement comes around. Most people start with the goal of having an emergency fund.

A great goal is to set aside six months of your base living costs (i.e., things you really can’t live without like rent, mortgage, food, electricity, etc.) in case you are suddenly unable to work. It’s typically advised to start working on this while you pay down debt. That’s because if you have an emergency and no emergency fund, you’re likely to take on more debt to pay for it.

Once you have an emergency fund, it’s time to take things to the next level by building your wealth and/or saving for retirement. At this point, some people recruit the help of a financial advisor to look at investment options or other avenues of growing wealth.

There are many ways to do this from cryptocurrency to real estate to stocks, so having expert advice is advised. However, simply contributing to a 401(k) through your job or setting up a Roth IRA fund is a simple way to start planning for retirement too.

Reassess Regularly

Your goals will change throughout your life. One obvious example is starting a family, which comes with many new (and often unexpected) costs. You may want to start setting aside money for your children to go to college or private school. Maybe you’ve paid off your house, and now you can use the money from your mortgage payment to invest or save.

Any time there’s a big change in your life, such as a new job or raise, it’s time to re-evaluate your goals and budget. However, it’s important not to drastically change your spending every time you get a raise. Instead, try to enjoy life while still prioritizing saving.

Improving your financial health starts with a few simple steps. If you follow these, you’ll have a great understanding of your current financial status and an exciting vision for the future.