This is a guest post by Ross Cameron. He is a full-time day trader and owner of Warrior Trading.  Click here to read about his strategies that lead him from debt to financial freedom.

People are constantly looking for creative new ways to go about having money, but perhaps the best way to go about it is to start with the basics. How much money you have is determined by two main factors—what you make, and what you save. So then the best way to have more money? Make more and save more. Easier said than done, of course, but just a bit of planning and establishing a few simple habits can end up making a big impact on that year-end financial assessment.

Build a Budget and Stick to It

Setting a budget can be beneficial to anyone, regardless of their account size. Even millionaires go broke. While budgeting can become second nature over time, saving money can be a hard thing to do especially if you’ve never budgeted before. One of the biggest mistakes that people can make with their income is to not build a financially responsible budget that allows them to save some of their hard-earned money. Another cause of financial failure is savers simply not sticking to the plan once it is set, and spending the money that was supposed to be put away.

How to Build a Budget

Building a budget can seem like an intimidating task when starting from scratch, but it is not too complicated and will benefit you in the long run.

1. The first thing you’ll want to do is calculate your after-tax income. How much money are you taking home, including health insurance, contributions to a 401K, and any other savings? If calculating your annual income, you can later divide it into monthly income in order to set your budget on a monthly basis, which makes it easier to save than looking at a whole year at once.
2. Set both short- and long-term goals for yourself. Do you want to save a certain amount per month? Is there a lump sum you want to have saved up at the end of the year or 5 years to put towards a house? Is there a certain amount that you want to have saved before your son goes to college?
3. Track your spending, including what your average recurring monthly expenses are. These include money spent towards food, housing (utilities, rent, or mortgage payments), transportation (public transportation, car payments, and gasoline), health insurance, children, entertainment, and debt and loan payments.
4. Divide your spending into three categories: needs, wants, and savings/debt payment.
5. Choose a budgeting plan that covers all of your needs and some of your wants, as well as extra savings for emergencies. Your choice of budget will depend on your goals. Many financial advisors argue that we should be saving at least 10-15% of our monthly income. That leaves you with around 85% for paying for housing, food, utilities, credit cards, car expenses, comfort, and entertainment. Another popular budget plan is one which allocates 50% of the money coming in towards needs, 20-30% towards savings and debt, and 20-30% towards wants.
6. Start paying off debt. To get ahead in your budget, you first have to catch up. Depending on the size of your debt, you may have to allot more to the “savings and debt” portion than to the “want” portion of your budget. You’ll still want to save while paying off debt because, simply, life happens. Unexpected expenses arise. Though it is important to fill in the hole of debt, you’ll also want to have some dirt to spare for the other unexpected repairs in your road along the way. Start paying off the cards with the highest interest rates first while continuing to make at least the minimum payments on the other cards. Pay the most towards debt that your budget allows.
7. Track your progress. Using spreadsheets is now an old school way to go about budgeting, though it is still effective. For a more modern approach, there are plenty of efficient and free budgeting apps that anyone can use to keep track of how they are doing with their budgeting goals.

One thing that makes budget-building less intimidating is remembering that your plan is not set in stone. It can, and should, be adjusted as needed. Some reasons that people may find to tweak their budget plan is job and income changes, family changes, and unexpected expenses like medical costs. Whenever a new project comes into play that needs its own pool of money (like a wedding or tuition fund), adjustments should be made to the distribution of savings.

Stick to the Plan

Budgeting might take time to plan but isn’t difficult and is worth it in the long run. Following that plan is a whole different story, particularly over extended periods of time.

The best way that I have found early on to stick to a budget was to pay whatever bills I had on the day that I got my paycheck, and then put 10% into my savings. If your bank has the option, you can have them automatically allocate the funds to pay bills and put money into your savings to keep you from having to do it and possibly not following through with it. Direct deposits will help automate your budget and keep you on track.

You can also start an at-home savings account by saving change or small bills. Committing to putting aside any unexpected earnings like bonuses and tax refunds will also make a significant impact on your savings.

You may also want to separate your savings account from your checking account if you find yourself overspending when you look at your account balance. If your savings are out of sight, you may feel less inclined to spend the smaller amount that is in your checking account. Plus, this will give you the opportunity to earn interest on your savings through the bank.

Free Up Your Cash: Cut Down

Saving money is not just financially smart—it is a great way to keep you out of financial ruin. If you lose your job or end up with a big medical bill it’s nice to have some money put away to help cover these unexpected expenses. Fortunately, some simple tips to save money can go a long way to grow your savings over time.

One way to free up some cash for savings is to cut down on some of your discretionary spending and reduce your expenses where you can afford to. The biggest expense people can cut down right away is going out. Dinner, drinks, and movies all add a lot to your expenditures, so if you can cut out a few nights a month to start, you will be making a big step in the right direction.

You can also look at buying a car with lower monthly payments and cheaper insurance, or you can even look towards public transportation and carpooling to save on fuel costs. If you have a habit of mindlessly using your credit cards, refrain from online shopping. Try to pay for some things in cash but use ATMs that do not have fees. Or use a credit card that has cash back or rewards that are useful to you. Follow through with rebates. Make your own products and grow your own food when you can. And always be a savvy shopper, comparing prices at different stores and businesses before you purchase items or services.

Small steps like these taken regularly will lead you to a better position to save more money for that rainy day or for a big purchase like your first house.

Expand Your Budget

Simply put, a way to expand your budget or to have more money to save and to spend is to increase the amount of money that you make. Some people will choose to invest in education, which will in turn help them get a higher paying job and help them not only pay back the money spent on learning, but have extra income coming in.

Many people look to additional sources of income to both expand their savings and to destress their living. The obvious advantage of extra income is that you can buy more goods with it, but it can also increase financial security. The important thing to remember when exploring options for secondary income is to stay away from secondary jobs in which the pay is not worth the time invested.

Find Your Secondary Income

Selling goods and services independently is a great way to get extra income. If there is something that you are good at, flaunt it. Writing, starting a blog, creating websites and graphic designs are common modern ways for people to get money on the side. The time I spent writing my book How to Day Tradewas definitely worthwhile. Not only did it make me feel personally accomplished, but it allowed me to put out useful piece of information in the world that others find valuable.

Still, the most profitable thing that I have done in my life was to pick up trading. It is a source of income that many people strive for, but only 10% actually succeed with. The reason that 90% of traders fail is because they enter the market before they are truly ready, which is why it is important to first invest in a good trading education. Determination, discipline, and drive can get you very far in life, but you also need the right tools to get there.

A Year to Remember

When we look back at the year behind us, no matter who we are, we will always see opportunity for growth. With clear goals, better planning, and a strong determination to reach those goals, we can all reach the financial freedom we search for. If you’re not already on that path, it’s time to step in the right direction.