How to create a budget in 5 steps

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Create a budget and get your finances in check with these 5 steps

It's also good to include details on how much you're saving each month, whether that's into traditional orOnce you've compiled a list of your monthly expenses, label whether they're fixed or variable. Fixed expenses are bills you can't avoid: rent, utilities, transportation, insurance, food and debt repayment. Variable expenses tend to be more flexible — your gym membership, for instance, or how much you spend on dining out.

Fixed expenses are easier to list on your budget than variable expenses since the cost is generally the same month-to-month. For example, debt repayment on a mortgage or auto loan will cost the same each month. But fixed utilities, such as electric and gas, and variable costs, such as dining and household goods, often fluctuate month-to-month, so you'll need to do some math to find the average.

If you find that the average you spend on groceries each month is $433, you may want to round up and set the spending limit to $450.The last step in creating a budget is to compare your net income to your monthly expenses. If you notice that your expenses are higher than your income, you'll need to make some adjustments.

 

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