How to Create a Budget – And Stick to It

Do you ever feel like your paycheck disappears as soon as you get it, and you no idea where that money is actually going? One way to fix this is to create a monthly budget. While creating a budget and sticking to it may seem impossible, breaking it down into four easy steps makes it a much more surmountable task. Having a budget helps you track where all of your money goes, and where you can reduce monthly expenses.


  1. Write down your net income for the month

To start creating a monthly budget, first, calculate all of the money you make in a month. Remember not to include any money that goes to deductions (Social Security, taxes, 401(k)). Remember to include all sources of income, including full-time work, part-time jobs and freelance work.


  1. List all of your monthly spendings

Next, calculate how much money you spend each month. Account for every dollar. Start with all of your fixed expenses (regular monthly bills such as mortgage, car payments, utilities, etc.). Then, list all variable expenses. These are items such as groceries, entertainment and credit card bills. Look for any opportunities to cut back.


  1. Set your money goals

Create both short and long-term goals for your money. Do you want to start saving for retirement? Your children’s education? Write those down and allocate how much money should be given monthly to these goals. These don’t have to be set entirely in stone, but having an idea of where you want your money to go in the coming years will help when planning your budget.


  1. Review budget periodically

Once you have your budget, don’t just set it away and forget about it. Check it monthly and make any needed adjustments. If your income changes, recalculate your budget. If you want to change one of your goals, re-examine that. Make notes of any areas where you spent more than you budgeted for and how you can improve on that.


Now that you have your budget all planned and written out, make sure you follow through with it! Use a budget spreadsheet or a personal finance app to make sure you’re staying on track.