A budget is a plan of how you will spend your money. Budgeting is not just about restricting your spending but rather creating a plan to reach your financial goals.
A budget helps you:
- Plan for your income and expenses.
- Save for emergencies.
- See how you spend money.
Steps to Creating a Budget
Creating a budget doesn't need to be complicated. Here are some steps to get started.
- Estimate Your Monthly Income
List your sources of income and how much you expect to receive on a monthly basis. Monthly income could include your job, dividends, side gigs, and any other sources of income. - Identify and Estimate Your Monthly Expenses
Look at your expenses from the past month and calculate how much you typically spend each month.Expenses could include: mortgage or rent, car payments, utility bills, insurance, groceries, dining out, gym membership, student loans, gas and transportation.
- Create Your Budget
Now that you know your income and expenses. Create a budget using a worksheet, spreadsheet, or app. Make sure that your essential bills are budgeted first.
Here's what a sample budget could look.
Item | Amount |
Rent | $ |
Credit Card Payment | $ |
Groceries | $ |
Eating Out | $ |
Tips If You Go Over Budget
You may need to cut costs if you spend more than you earn. Here are some options to consider:
- Reduce variable expenses
Adjust your spending in categories that change each month. This may involve eating out less, cutting back on entertainment, or using public transportation. These numbers can always change depending on your choices. - Reduce fixed expenses
If reducing your variable expenses doesn't cut it, determine if you can reduce your fixed costs. See if you can convert to a cheaper phone bill, internet bill, or other expenses. - Increase income
If you cannot adjust your expenses further, consider ways to increase your income.
Budgeting Worksheets and Apps
- Monthly Budget Worksheet
From the Federal Trade Commission. - Another Monthly Budget Worksheet
From the Consumer Financial Protection Bureau. - Kiplinger Budget Worksheet
From Kiplinger Magazine. - List of Budgeting Apps
Forbes Magazine.
Budgeting Guides and Tips
- How to Create a Budget and Stick with It
Consumer Financial Protection Bureau. - Budgeting Tips for College Students
Department of Education. - Healthy Eating On A Budget
From US Dept. of Agriculture
En Español
- Cómo hacer un presupuesto y mantenerse en él
Consumer Financial Protection Bureau - Una herramienta fácil para vigilar sus gastos
Consumer Financial Protection Burea - Hacer un presupuesto
Federal Trade Commission - Haga un presupuesto
Federal Trade Commission