Setting up and sustaining a budget is crucial to achieving financial goals. Here are the things you should keep in mind while creating one. 1. Separate needs & wants The first step in creating a budget is establishing the cash flow, that is, listing out the income and expenses. Next, identify the things you spend on and segregate the items into two categories— necessities and discretionary spends. The first includes things that are indespensable, like groceries, rent and utilities, while the second comprises wants or recreation (dining out, weekend trips, movies). It is essential to first provide for your needs, which means that you should pay your utility bills and carry out grocery shopping before buying the latest gadget. This may involve some sacrifices, but will ensure long-term stability. So try to be honest with yourself while identifying where and how much you are spending and stick to the budget 2. Don't count the extras While listing out your income, don&