(NewsNation) — With 2025 in full swing, there is no better time to start the year off with less financial stress.

Thirty-six percent of Americans owe an average of $1,181 in credit card debt from holiday shopping. Crafting a tailored budget to your financial needs is essential to paying off what you owe — and avoiding interest.

NewsNation spoke with a personal financial expert about how to build a budget.

5-step process to building a budget

Elizabeth Ayoola with NerdWallet, a financial services company, recommends following a five-step process.

1. Determine your after-tax income. Add up all your income, including side gigs, after taxes to know how much you have to work with each month.
2. Choose a budgeting system. This is not a one-size-fits-all, so try different methods to see which one works best for you.
3. Track your progress. Some may struggle with consistency, so tracking your progress is important to achieve your financial goals. NerdWallet suggests using budgeting apps to track expenses.
4. Automate your savings. Set up an automatic deduction from your checking account to your savings account. You can also automate your bills to deduct from your checking account without having to think about it every month. However, NerdWallet cautions against overdraft fees if you don’t have enough in the account.
5. Practice budget management. Update your budget as your lifestyle and financial situation change. If you get a new job, get married, lose income sources, or develop a new health condition, you should review and adjust your budget.

Budgeting methods

There are different budgeting methods to follow, from the zero-based budget to the pay-yourself-first budget. What works for one person may not work for the next.

For the overspender, Ayoola recommends the zero-based budget system, which involves allocating every dollar to something until your balance reaches zero.

“This can be a little bit meticulous, but the good thing about this system is it really helps you to see where every single dollar is going,” Ayoola said.

“The goal is to get to zero at the end of the month and allocate every single dollar that you have, giving it a home, essentially. So it can be good to track spending expenses and see where all your money is going.”

For the person who doesn’t want to track every dollar: “They may try the pay-yourself-first method,” Ayoola said. “Essentially what this is is you pay yourself first. … and you put money toward savings, and then you can essentially spend the rest on bills and whatever you want.”

Other methods include the envelope system, the no-budget budget, and incremental budgeting.

Budgeting tools

“Budgeting apps can be extremely helpful because they can help you do everything from start to finish when it relates to budgeting,” Ayoola said. “If you know that you’re more hands-off and you want something that’s not too meticulous, you may also consider using budgeting apps.”

Budgeting apps allow you to customize your budget, personalize it to your spending and lifestyle, track your net worth, review educational resources, and track expenses.

“These apps will link to your financial institutions for you to see all of your expenses in one place and also group them into different budgeting categories so you get a clearer picture of where all your money is going,” Ayoola said.

NewsNation has compiled a list of budgeting apps you can find here.