How to Make a Monthly Budget: A Simple Step-by-Step Guide

A couple creating a budget on a computer.

What is a Budget?

Think of a budget as a monthly plan for how you will use your money. It compares the money you have coming in with your expenses, savings and other financial goals.

The Simple
Budget Formula

Monthly Income

Add up the money you bring home each month.

Monthly Expenses

Add up your needs, wants and other monthly expenses.

Money Left Over

See what you have available for savings and other financial goals.

Example
$4,000 income − $3,200 expenses = $800 remaining

Why Do I Need a Budget?

  • Track your monthly income and expenses

  • Understand where your money is going

  • Create a monthly spending plan

  • Avoid overspending and stay within your budget

  • Build an emergency fund for unexpected expenses

  • Pay down debt and manage monthly payments

  • Save for major purchases, such as buying a home

  • Plan and save for retirement

How to Write a Budget?

Learning how to make a budget starts with understanding how much money you have coming in and where that money goes each month. A simple monthly budget can help you organize your income and expenses, plan your spending and set aside money for savings and other financial goals.

1. Calculate Your Monthly Income

Start by adding up your monthly take-home income or net pay. Include your paycheck and any other regular sources of income you can count on each month.

2. List Your Monthly Expenses

Make a list of your monthly expenses, including housing, utilities, groceries, transportation, insurance, debt payments and other regular costs. 

Separating needs vs. wants can make it easier to see where your money is going and identify expenses you may be able to reduce when creating your monthly budget.

Needs

These are essential expenses you need to pay each month.

  • Rent 
  • Loans 
  • Utilities

Wants 

These are expenses you enjoy but may be able to reduce or eliminate if needed.

  • Dining 
  • Entertainment 
  • Streaming services

Use the 50/30/20 budget rule 

50% Needs: housing, utilities, groceries, transportation, insurance and minimum debt payments 

30% Wants: dining out, entertainment, streaming services, shopping, travel and hobbies 

20%Savings and Debt Repayment: emergency savings, retirement savings, other financial goals and debt payments above the minimum

Monthly Budget Planner

Build a budget
that works for you

Enter your monthly take-home income and expenses to organize your budget into needs, wants, savings and debt.

$
50%

Needs

Essential monthly expenses

Needs Total $0
30%

Wants

Flexible lifestyle expenses

Wants Total $0
20%

Savings & Debt

Money for financial goals

Savings & Debt Total $0
Your Budget

See the difference

Monthly Income $0
Total Planned $0
Money Remaining $0
Needs 0% Guideline: 50%
Wants 0% Guideline: 30%
Savings & Debt 0% Guideline: 20%

Enter your monthly take-home income to see your budget breakdown.

The 50/30/20 budget rule is a general guideline. Your budget may vary based on your income, expenses, financial obligations and goals.

Take the Next Step With Your Money
How to Save Money How to Set Finanical Goals
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