Budgeting sounds like a lot of work — and deprivation, as budgeting is often synonymous with cutting expenses. (Like a diet for your money.)

But a budget isn’t so bad. It’s basically a plan for how you spend your money. And if you’re dealing with reductions in income, it can be a critical tool in making sure you’re able to meet your obligations.

Here is a simple plan to create and use your budget.

1. Figure out how much money you have coming in.

Look at all of your sources of income and categorize them as fixed or variable. For example, if you get paid a steady salary or rental income, that is fixed. If you are paid hourly or on commission, that would be variable income.

2. Gather your expenses.

Next is the same task you just did for the money coming in, but now do it for the money going out. It’s helpful to categorize by fixed and variable expenses here, too. Fixed expenses are payments for rent or mortgage, your car, utilities, cable, and other things that don’t change a lot and are due at the same time each month. Variable expenses are food expenses (including groceries and dining out), clothing, entertainment, and other things that shift around and vary widely.

If you’re not sure where you’ve been spending money, you can look back through your debit and credit card purchases in online banking to see what you spent last month or start tracking for a month to get a good idea going forward.

A bonus step would be to also categorize your expenses as essential or discretionary.

3. Do the math.

Now that you know what money is coming in and what is going out, figure out if your income covers your expenses. For variable income, use the lowest typical amount. And for variable expenses, try using the highest typical amount.

4. Set priorities

At this point, you might see things in your budget that you’d like to change. You might want to cut back some discretionary categories because your spending isn’t matching your priorities. You might want to increase your overall savings contributions. Or you may have found that your expenses are outpacing your income, so you need to make cuts. Online budgeting tools, coupon sites, or even just a good old-fashioned paper ledger can help you ensure that you’re hitting your new budget priorities.

You may want to discuss your budget as a family so every family member is aware of the situation and the priorities. Consider having periodic check-ins to keep everyone up to date on your progress.

This may also be a good time to make a contingency budget in case you experience job loss or some other loss of income. What expenses can you reduce in that case? Getting buy-in from everyone in the family will ensure that if you are in a position to have to make drastic changes, everyone will have agreed on what can go and what needs to stay. As you can see, a budget doesn’t have to be scary or painful. If you need more help, please check out our financial fitness resources.