5 Simple Steps to Create a Budget Plan that Works

Why make a Budget?

Managing your money effectively is one of the most essential life skills, yet many people find themselves struggling with it. Whether you’re trying to pay off debt, save for a big purchase, or simply ensure you’re not living paycheck to paycheck, a solid budget is the foundation of financial success. In this guide, we’ll walk you through the process of creating a budget that works for you.

A budget helps you allocate your income toward your expenses, savings, and debt payments. It gives you a clearer picture to see how your money is working for you, rather than the other way around. Without a budget, it’s easy to overspend, rack up debt, or miss out on saving for your goals.

1. Calculate Income

• This is money coming in such as salary, freelance work/side hustles, and any additional sources of income.

2. Calculate Fixed Expenses

• These are recurring expenses that stay the same each month such as rent or mortgage payments, streaming services (ex. Hulu, Netflix, HBO Max,) insurance (ex. auto, life, health, rental and/or homeowner's insurance), car loans, cell phone bill, and student loans)

3. Calculate Variable Expenses

• These are expenses that fluctuate every month such as gas, groceries, dining out, entertainment, and credit card bills.

4. Subtract both fixed and variable expenses from your income

• If you have money left over, allocate it to different goals such as an emergency fund, retirement, paying off credit card debt, additional payments towards your mortgage or student loans, or travel.

• If you are in the negative, then you'll have to determine which "wants" to get rid of (do you really need that HBO Max streaming service?).

5. Keep track of your spending

• Use a spreadsheet or apps to track spending.

Budgeting isn't about restricting yourself-it's about empowerment. When you have a clear picture of where your money is going, you’ll feel more in control and able to make informed financial decisions. With patience and practice, budgeting will become second nature, and you’ll be well on your way to achieving your financial goals.