Six Steps to a Monthly Budget

As mentioned earlier in this module, budgeting is basically a way of comparing how much money you spend with the amount of money coming in. By doing this, you can understand your current state more fully and adjust to achieve your goals!

1. Total your monthly take-home pay: what shows up in your account every month?
2. Add up fixed costs What expenses come up every month and don't change much? (Rent, utilities, subscriptions)
3. Look at your financial goals - Add up what you're putting away for emergency funds, vacation savings, etc.
4. Factor in non-monthly costs - Add up the big expenses that come up a few times a year (holiday gifts, vehicle registration fees, etc) and divide them up by 12 so that you can plan ahead for them.
5. Add up your flex spending - Take the expenses that vary (like food, shopping, or gas) and make an estimate of how much they usually cost you in a normal month).
6. Do the math! Subtract fixed costs, savings goals, and non-monthly costs from your monthly take-home pay. The amount that's left is for flex spending. You can compare that amount with the money that actually goes toward your flex spending now.

Remember, the perfect budget is one that helps you live your best life right now while saving for your future later!

Remember, if you want some help setting up that budget, you can start with the downloadable budget template below!