Financial Education Clearinghouse

Guide to Setting Up A Budget

A budget is a planning tool to help you manage your money. A budget helps you identify your personal financial goals, analyze what income you have available, know what you are spending money on, and develop steps to achieve your personal financial goals.

The information below will help you get started with a personal budget.

1) Gather Your Personal Financial Information

The first thing you need to do is gather your personal financial information. Collect recent paycheck stubs, bank statements, credit card statements, and credit card receipts. Gather all documentation on how you spend or earn money.

2) Calculate Your Monthly Income

Start by calculating your monthly income. Look at all of the money you have incoming each month (jobs, child support, part time jobs, dividends, etc)

Print out: Calculating Income Worksheet

3) Calculate Your Expenses

Review your past few bank statements and determine your monthly fixed (cable bill), variable (electricity bill), and discretionary (clothing) expenses.

Print out: Calculating Expenses Worksheet

4) Calculate Your Net Income

Calculate your net income: your monthly income minus your total expenses.

Print out: Calculating Net Income Worksheet

5) Identify Debts and Develop A Debt Reduction Plan

If you have debts that you need to pay down, identify those and develop a plan for paying those down.

Print out: Identify Debts Worksheet

Print out: Debt Reduction Plan Worksheet

6) Analyze Your Expenses and Develop a Spending Plan

Analyze your income and develop a spending plan using this worksheet from the Federal Trade Commission.

Print Out: Create Your Budget (Source: Federal Trade Commission)

When developing your plan, decide what you want to do with any surplus of money you have. Options might include investing, saving for a goal, or developing an emergency savings account.

Budgeting Worksheets and Calculators

  • Develop A Budget Worksheet
    Budgeting worksheet from the Federal Trade Commission.
  • Retirement Ballpark E$timate
    How much do you need to set aside for retirement? To truly answer this question you should meet with a financial professional. However, this online calculator from the American Savings Education Counseling can help you get started with understanding your retirement needs.
  • Payroll Deduction Calculator
    Want to increase the amount you set aside monthly for your retirement account but worried it will impact your monthly budget? This calculator from the American Institute of Certified Public Accountants will help you determine the impact of changing your payroll deductions.
  • Emergency Savings Calculator
    We hear financial experts tell us all the time that we need to set aside money in a liquid account for an emergency. But how much should you set aside? This calculator from the American Institute of Certified Public Accountants will help you determine your emergency savings needs.
  • More Budgeting Calculators
    Money Management International has nearly 500 calculators to help you determine things such as how long should you keep a vehicle, how much you should put down for a new home, and more. Check them out.

Help with Setting up a Budget

Professionals in your community can help you set up a budget. Here are a few organizations where you can find local help: