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How to Make a Budget

A budget is a financial plan for a defined period. Budgets include planned sales, volumes and revenues, cash flows, and much more. Budgets can be used by governments, businesses, and individuals. If you want to pay off your student or credit card debt, buy a house, purse, or tickets to a sports game coming up but are short money, you are going to budget your money to make it possible; this could mean not eating out as much, shopping less, or not buying tickets for movies or other sports games. There are multiple steps to making a budget for yourself.

Step 1: Figure out what you’d like to budget for

Before you start budgeting, it is important to remind yourself why you are doing this. Write down what you’re budgeting for and your financial short-and-long term goals to make sure you stay on track.

Some may budget to add more to their savings, and others may have an event such as a wedding, honeymoon, or purchasing a home on the horizon. Choose a goal that makes you feel excited about budgeting and write down this goal to emphasize your commitment.

Step 2: Calculate total income

To set a budget, U.S.News suggests starting by tracking the flow of income in your household to determine monthly income. If you earn a salary, it’s important to factor in how you get paid – monthly, biweekly, or weekly. The amount of each paycheck in a singular month is your monthly income. Self-employed workers should look back on their payment history, at least a year’s worth. Keep in mind outside monthly incomes including side business earnings, investments or rental property income.

Step 3: Track your spending

Now that you have figured out your total income, the next step is to understand where it’s going. According to tracking your money can help discover where you are spending the most money and identify opportunities to save the most. Start by listing your fixed expenses, which do not change month to month, and your variable expenses, which are costs that can change month to month. Check the table below to see examples of both fixed and variable expenses. It is recommended to cut down on your variable expenses to budget with more money because these expenses are either not necessary payments or there are ways to lower the cost.

Examples of Fixed Expenses

Examples of Variable Expenses

Rent Payment


Car Payments

Heating Bills

Netflix Subscription


Property Taxes


Loan Payments


Step 4: Create a budget plan

Now it’s time to make a budget plan. It's worth nothing that because a budget plan worked for a loved one, it doesn’t mean it will work for you. There are multiple budget methods to choose from, so you have to find the method that works best for you. One of the most popular budget methods is the 50/20/30 plan.

You may wonder what falls under savings or debt, wants, and needs; let us help you. Needs being 50% of your budget after tax would consist of rent, mortgage payments, car payments, or health care, wants or 30% of your budget, consists of movies out, the handbag you want, vacations, or tickets to a sporting event. Lastly, the last 20% comprises of savings or debt; this percent can include adding money to an emergency fund, IRA contributions, student debt, or credit card debt.

Another method of budgeting is the "pay yourself first" method; this method is an investor mentality and is used frequently in personal finance. The basis of this method is to make sure income is saved or invested first before monthly expenses or other purchases. The main advantage of this budgeting plan is you will build enough money to secure your future and create a cushion for other financial emergencies.

Want to learn more?

Contact our bank associates or visit one of our many locations and let us help you put together a budget that works perfectly for you!