In Microsoft Word, open up Format > Styles and Formatting. This will bring up a window on the right hand side. Listed will be each different style used in the document. We're interested in Heading 1, 2, and 3.
In our example, let's say that we have the document divided by chapters, and the chapters divided by sections. Select the CHAPTER 1 label in the document, and click Heading 1 in the Styles and Formatting window. Notice that the font size and style of the CHAPTER 1 text will update to look just like the Heading 1 text appears in the Styles and Formatting window. You can change the appearance of this later if needed.
Now go through the document and select section labels and change them to Heading 2. Again, these will be updated to match the settings for Heading 2. The default Heading 2 is Arial 14 pt italicized. This can continue to Heading 3, 4, etc. if needed for your document. Once you have formatted the headings of your document it's time to let Word build a Table of Contents.
Scroll to where you would like the Table of Contents inserted and click Insert > Reference > Index and Tables. Notice the tabs on the dialog box that open up. Select the second tab "Table of Contents". It's fairly straightforward to customize the options in this tab, but I recommend just using the default settings which are pretty basic. You can always change these later if you want.
You'll get a default that looks something like this:
In addition to giving a professional look and helpful directory for the readers of your document, Tables of Contents include hyperlinks by default. In a large document, you may know the section heading that you are looking for but perhaps not the page number. Instead of scrolling through a long document, just go to the Table of Contents, hold CTRL and click on the the section you want to see. This will take you to that precise location in the document. Convenient!
Now, it might take a while to format a large document in order to prepare it for the Table of Contents, but once you see how easy it is to format your headings, you can format them as you work.
As you revise the document, you may occasionally find that you need to update the headings and page numbers in the Table of Contents. To do so, just right click anywhere in the table. Select "update entire field" and Click OK. Voila ~ the Table is updated to reflect your changes.

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