In life, we can tend to overcomplicate things, from relationships and dinner plans to our finances and budgets. But, just like everything else, budgets don’t have to be complicated. They don’t have to be lengthy charts with complex formulas and frustrating math. Streamlining your budget into five main categories can make it easier to set up and follow, which will put you on track to realize your financial goals. By following the 5-step method outlined below, you should be able to cover costs, pay down debt, and even have some extra money to splurge at your favorite local shops.

Category 1: Housing

Home sweet home! When creating your monthly budget, the first thing you need to consider are your housing costs. Since your home is the place you likely spend most of your time (especially these days), it needs to be a top priority. Your housing costs should include your mortgage/rent, monthly utilities, property taxes, and housing insurance. As a general rule, your housing costs shouldn’t exceed over 30 percent of your take-home income. If you are finding that this is not the case, it may be time to explore your options and see if you have the ability to reduce your monthly costs in this category. If you can’t find any reductions, you may consider looking into something new that is better suited to help you stay within that 30 percent.

Category 2: Transportation

Next, the thing that gets you from place to place – your ride. Whether you own a car or take the bus, transportation fees need to be built into your budget. This category not only includes monthly car payments, but also encompasses auto insurance, gas, oil changes, bus passes, car washes, and anything else relating to your main mode of transportation. It is recommended that your transportation expenses stay below 15% of your monthly income.

If you do not currently have a car but are looking to get one soon – this category can be used as a saving mechanism to get you the (affordable) “wheels” of your dreams.

Category 3: The Outliers

What about shopping, family vacations, or cable? Those are all expenses that go into your outlier category. This is an all-encompassing section that ranges from your fun monthly expenses like family outings and shopping trips to your regular reoccurring bills such as cable, telephone, and any other monthly subscriptions or memberships. Experts suggest allocating no more than 25% of your monthly income to this category.

PRO TIP: If you are looking to cut down on your expenses to have extra money for savings or future fun, review your monthly subscriptions and memberships and trim the fat!

Category 4: Paying Off Debt

Debt is not something people commonly like to discuss, but the truth is just about everyone deals with debt to some degree. By making the effort to pay down your debts, including student loans and credit card bills, you are beginning your journey to a debt-free future. It is suggested that 15% of your monthly income be allocated to this section.

NOTE: This category should not include your mortgage or car payment as both items have been accounted for in previous categories.

Category 5: Savings

If you’ve heard it once, you’ve heard it a thousand times: “PAY YOURSELF FIRST.” This tried-and-true budgeting practice guarantees that your growth and financial wellness is being looked after each month. This category should include emergency funds, children’s tuition, and other needs or items that you are working to afford. This section should take up to 10% of your monthly income.

To simplify this process, consider scheduling recurring transfers to your savings account following payday each month. This will automate your savings and help you reach your savings goal each month.

Whether you utilize this 5-step budget or a different easy to follow system such as the 50/30/20 method—be sure to check in frequently and update your budget monthly as necessary.

PRO TIP: When creating your 5-step budget, write it down on a sheet of paper and place it on your refrigerator or another place you will see it frequently. The constant reminder will help you rein in your spending and keep your goals in focus!

Budgeting can seem daunting but with a little practice, you will begin to see what all the talk is about.