Budgeting
Learn how to create and manage a budget to take control of your finances
WHAT IS BUDGETING?
Budgeting is the process of creating a plan for how you'll spend your money. It helps you track income and expenses, prioritize spending, and achieve financial goals.
A budget ensures you're not spending more than you earn and helps you allocate money toward your priorities, whether that's paying off debt, saving for retirement, or building an emergency fund.
💰 Control Spending
Know exactly where your money goes and avoid overspending
🎯 Reach Goals
Allocate money toward specific financial goals
📊 Track Progress
Monitor your financial health and make adjustments
🚨 Avoid Debt
Prevent overspending that leads to credit card debt
POPULAR BUDGET RULES
50/30/20 Rule
60/20/20 Rule
70/20/10 Rule
80/20 Rule
BUDGET CALCULATOR
Needs
Wants
Savings
BUDGET CATEGORIES
Essential Needs (50% of income)
Housing
30%Rent or mortgage, property taxes, insurance, utilities, maintenance
- Rent/Mortgage
- Utilities (electric, water, gas)
- Property insurance
- Property taxes
- Home maintenance
Food
10%Groceries and essential food items (not dining out)
- Groceries
- Essential household items
Transportation
10%Car payments, gas, insurance, public transit, maintenance
- Car payment
- Gas
- Car insurance
- Public transit
- Car maintenance
Insurance
5%Health, life, disability insurance premiums
- Health insurance
- Life insurance
- Disability insurance
Minimum Debt Payments
5%Minimum required payments on credit cards, loans
- Credit card minimums
- Student loan payments
- Personal loan payments
HOW TO CREATE A BUDGET
Calculate Your Income
Add up all sources of monthly income: salary, freelance work, side hustles, investment income. Use your net income (after taxes) for accuracy.
Track Your Expenses
Record all spending for 1-2 months. Use bank statements, receipts, and apps to track every dollar spent. Categorize expenses into needs, wants, and savings.
Set Your Budget Categories
Allocate percentages or dollar amounts to each category based on a budget rule (like 50/30/20). Adjust based on your income, location, and financial goals.
Use Budgeting Tools
Choose a method: spreadsheet, budgeting app (Mint, YNAB, EveryDollar), or envelope system. Pick what works for you and stick with it.
Review and Adjust Monthly
At the end of each month, compare actual spending to your budget. Adjust categories as needed and identify areas where you can cut back or reallocate funds.
COMMON BUDGETING MISTAKES
❌ Not Tracking Small Expenses
Small purchases like coffee, snacks, and subscriptions add up quickly. Track everything, no matter how small.
❌ Setting Unrealistic Budgets
Don't eliminate all wants or set savings goals that are impossible to meet. Start realistic and adjust gradually.
❌ Forgetting Irregular Expenses
Annual expenses like insurance, car registration, or holiday gifts need to be budgeted monthly. Divide annual costs by 12.
❌ Not Adjusting the Budget
Life changes, and so should your budget. Update it when income changes, goals shift, or expenses increase.
❌ No Emergency Category
Always include an emergency fund category. Unexpected expenses will happen, and you need to be prepared.
❌ Giving Up After One Month
Budgeting takes practice. Don't quit if you go over budget one month. Learn from it and adjust for next month.
BUDGETING TIPS
✅ Pay Yourself First
Transfer savings and retirement contributions immediately when you get paid, before spending on anything else.
✅ Use the Envelope Method
For cash-based categories, use physical envelopes. When the envelope is empty, you're done spending in that category.
✅ Automate Savings
Set up automatic transfers to savings accounts. You won't miss money you never see in your checking account.
✅ Review Weekly
Check your budget weekly, not just monthly. This helps you catch overspending early and make adjustments.
✅ Include Fun Money
Budget for entertainment and wants. Completely eliminating fun makes budgets unsustainable and leads to failure.
✅ Use Round Numbers
Round up expenses and round down income when budgeting. This creates a buffer and makes calculations easier.