The Most Important Budgeting Step Comes Before No. 1

Deciding to tighten your belt — or to begin budgeting at all — can come from any number of impulses. Whether you're actively saving toward a goal or just realizing that you have to rein in your spending, there's never really a bad time to take stock of your financial habits. But before you figure out whether your best asset will be a bullet journal or a spreadsheet or an app or a budgeting buddy, there's one key step you have to take first.

Lots of people have lots of thoughts about the ideal budget. It's one of the reasons why so many personal finance diaries can be so infuriating. But your budget is yours first and foremost, and that means it's not going to look precisely like anyone else's. That means that before you can decide what percentage of what you earn and spend should go where, you need to understand what your wants and needs are now.

Track your spending for a set amount of time before you make any decisions about your budget going forward. Some do it for one month; blogger Anna Newell Jones, who paid off $24,000 in debt over 15 months, looked back at three months of spending. Your process can be as simple or as fancy as you want, so long as you accrue a suitable amount of data. Give yourself as much information about yourself going into the budgeting process as you can. When you can make informed decisions, your decisions can pay off in ways you never expected.