How to plan a budget

A budget is a plan you develop to decide how you will spend your money over a certain period (every day, week, month, or year). This plan shows you how much money you make and how you spend it.

Budget planning is as simple as that:

  • Gather your bills and pay stubs: Think about how you spend money besides paying your bills. For example, do you buy a cup of coffee every day? Do you pay for education or entertainment? After a month, that coffee, education, and entertainment money could add up to an expense you might write down.

  • Write down your expenses: Record the money you spend.

  • Write down your income: Note how much money you make.

  • Calculate your balance: Subtract your expenses from your income.

  • Adjust if necessary: If the number is less than zero, you are spending more money than you make. Look for things in your budget you can change. Maybe there’s something you do not need, or there is a way to spend less.