A budget is a tool to help you plan, prioritize, and manage your income and expenses. Review your budget often and update it when you are experiencing a change in income and expenses.

To Do

Create a budget.

  • Write down your monthly take-home pay. Or if you’re out of work, your unemployment compensation. If you’re in sales – or work on commission – you may have to estimate, since your income may vary from month to month. List income you receive from any source, like a part-time job, a tax refund, gifts, unemployment, public assistance, dividends, and alimony or child support. Add the entries to determine your actual income for that month. Keep in mind, some of these amounts may fluctuate.
  • List how much you deposit in savings each month from your take-home income, even if it’s only a small amount.
  • List your fixed monthly expenses – the predictable, set amounts for the must-have items and services that you pay for each month – like rent or mortgage, car payment, and telephone, cable, or Internet access.
  • List your variable expenses – the amounts that change, as well as the expenses you pay weekly, monthly, quarterly, semi-annually, or every year – like groceries, clothing, haircuts, property taxes, auto and homeowners insurance, and gas and electric.
  • List estimates for once-in-a-while expenses – like birthday and wedding gifts, or holiday gifts and entertainment.
  • Total your fixed and variable expenses and divide by 12 to get a monthly estimate.
  • If after paying your bills and putting money in savings, you still have funds, you can carry over the balance for the next month or use it for unexpected expenses. If this month’s balance is negative, look for ways to cut back on the variable expenses.