Budget for beginners: a simple four-step start

A budget is just a plan for your money: what comes in, what goes out, and what is left. You do not need an app or a spreadsheet to begin. The steps below follow the CFPB’s budgeting guidance.

Open the budget planner

Step 1: List your income

Write down every source of money: paychecks, self-employment, a second job, child support and government benefits. For the budget, use the amount that actually lands in your account each month.

Step 2: Track your spending

Track an average month and sort the spending into categories such as housing, food, transportation, utilities, phone, insurance, subscriptions and debt payments. If a full month feels like too much, the CFPB suggests looking at one week at a time, or keeping a daily log to catch small purchases. Our planner uses these same categories.

Step 3: Line up bill dates and pay dates

The CFPB points out that when bills are due compared with when income arrives can cause shortfalls even if the month’s totals work. Late payments can also hurt your credit. Note the due date of each bill next to your pay dates.

Step 4: Build a working budget

Put income, spending and bill dates together, then subtract. If income is more than spending, decide on purpose where the leftover goes: a goal, extra debt payments or savings. If spending is more than income, look for lines to lower. Two ways to organize it:

• 50/30/20 comparison. A popular rule of thumb, not official guidance. It shows how your split compares and the dollar gap in each bucket.
• Zero-based. Assign every dollar until nothing is left unassigned. Read the zero-based budget guide.

Making it stick

• Be realistic. The CFPB’s advice is to start by looking at your finances one month at a time.
• Use a method you will keep up. A daily note or a folder for receipts that you review weekly both work.
• Review monthly at first, and update the budget when your income or spending changes.
• Set a goal. Put a date on it in the dated savings plan.