Information from the Washington State Department of Financial Institutions

Creating a budget

A budget is a planning tool to help you determine how you will spend your money.

Steps to creating a budget

  1. Calculate your income
    The first step in starting a budget is finding out how much money you make in a month.

    Calculate your net income, which is your final, after-tax take-home pay. You should include your full-time job and any other income sources, like income from rental properties or dividends. 

  2. List your spending and expenses
    Begin by listing all of your fixed expenses, such as mortgage or rent, car payments and student loan payments. These are expenses that stay the same each month.

    Then, list your variable expenses, such as dining, entertainment, travel, groceries and other expenses that vary from month to month.

    Finally, add in other expenses, such as taxes and insurance, which may be billed annually, semi-annually or quarterly.

  3. Set and fund your goals
    Setting your goals will determine your success in planning and keeping a budget. You should make a list of both short- and long-term financial goals you want to accomplish.

    Short-term goals, like saving up for a vacation, should take a year or less.

    Long-term goals, such as saving for retirement or your child's college education, are goals that will take years to accomplish.

  4. Create your budget
    Using whatever system works for you (online app or website, envelope system, excel spreadsheet, paper budget), create a budget.

    Find areas where you can cut back and find areas where you can fund your short term and long term goals.

  5. Review and track your progress
    It is important for you to track your progress and review your budget frequently.

    Your budget will likely change over time depending on your salary and financial goals. 

Helpful resources and websites