Creating a budget
A budget can help you keep track of spending, separate needs from wants, and find extra money for financial priorities.
Why create a budget?
Setting realistic goals and sticking to a budget may help you improve your financial wellness and manage multiple priorities. Budgeting can be as simple as sending part of your paycheck to a savings account. If you don’t see the money, you won’t think to spend it. You can also use this five-step budgeting plan:
Step 1: Set your goals
Step 2: Add up your income
Step 3: Track your expenses
Step 4: Find money to save
Step 5: Put your plan into action
Start by setting goals
Think about why you want to create a budget. Is it to keep track of general spending, or are you trying to find extra money for something specific? Maybe you’re saving for a new car, or retirement, or putting money aside for financial emergencies. Maybe you’re focused on paying down debt. Think about what’s important to you.
Add up income and track expenses
Next, add up your income. Then, track your expenses. If you do this for a month, you should get a good idea of how you’re spending your money. You may be surprised how impulse buys and streaming services add up. Make sure you include any recurring charges to a credit card, which can be easy to forget.
Find extra money
This is where you can differentiate between needs and wants. What can you cut back on or eliminate to find money for your goals?
Put your plan into action
Finally, put your plan into action. A budget doesn’t work if you don’t stick to it!
With so many competing priorities, don’t forget to save for your future. Put some of that extra money away to help you achieve the retirement you envision.
Make budgeting simple
This budgeting worksheet can help you separate needs from wants and build a budget that works for you.