5 Steps to Create a Simple Budget

Creating a simple budget can be a pivotal step in building a strong financial life. If you're ready to create your budget, follow these five steps!

Step 1: Add Up Your Income

The first step in creating a simple budget is to add up your monthly net income (what you take home after taxes and other deductions). Think of income as the foundation of your budget.

Step 2: List Your Expenses

Next, list out all of your monthly expenses. Include housing, utilities, loans, food, fun and any other category you would like to track. Some expenses will be the same every month (fixed), while other expenses will fluctuate (variable). For the variable expenses, make your best guess for now.

Step 3: Split Into Needs vs. Wants

Now that you’ve gathered your expenses, organize them into two categories: expenses you can’t live without and expenses you’re comfortable changing. These two buckets should show opportunities for cutting costs and building your savings.

Step 4: Set Your Spending Limits

Next, decide how much you want to spend each month in each category from step 3. The total of all categories cannot be more than your net income from step 1, so you may need to make adjustments.

Step 5: Track and Adjust

Now for the fun part! Track your spending in a notebook or with an app and compare it to your budget. Try the Money Management tool in our Internet Banking platform! As your situation changes, you can make adjustments to the budget. If you’re spending too much on a category, reallocate that money.

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