Having a budget helps you understand where your money goes and can help you reach your financial goals. Learn how to budget with these 5 steps—and then keep it going every month.
Step 1: Find your “Why”
You need to define your goals. Whether it's buying a laptop, paying for a car, or saving for emergencies, it's important to know what you're saving for.
Step 2: Note your monthly income
Figure out how much you make each month by adding up all your sources of income (paychecks and any other money you have coming in).
If your income varies from month to month, base your budget on a month with a lower income.
Taxes are usually deducted before you get your pay. Don’t forget to set money aside to pay taxes if you are paid in cash.
Step 3: List your monthly expenses
Look through your previous bank statements to figure out your expenses. Your budget will only be helpful if it’s accurate, so make sure to include everything from dining out, entertainment, and more.
Step 4: Prioritize what’s important to you
Consider budgeting money for:
- Current You: personal care, clothes, a weekend getaway
- Future You: new car, new home, vacation funds
- Possible You: car repair, home repair expenses, medical expenses
Step 5: Keep at it
Consistency is key when it comes to budgeting. Don't forget to celebrate your wins. Whenever you hit a milestone, be sure to treat yourself. Just make sure you budget for it.