Everybody agrees they need a budget. Here are simple steps to preparing a budget that works for you.

A big reason that most people don’t do budgets is because they think it is too complicated and too hard to do. But actually, doing a budget is not hard. Living by it, yes, that’s hard, but doing it is not complicated, we promise. Try these simple steps using the template and instructions below:

Item # Amount Monthly Income/Monthly Expenses/Allocations
1   Take Home Pay (monthly, after witholding taxes)
2   Monthly Income from other sources
3   Savings Plan (monthly amount)
    Add items 1 and 2, then subtract item 3 to get estimated income
4   Fixed Expenses (monthly)
5   Variable Expenses (average over 12 months)
6   Occasional Expenses (average over 12 months)
7   Add items 4 – 6 to get estimated monthly expenses


  1. Write down your monthly take-home pay. Or if you’re out of work, your unemployment compensation. If you’re in sales – or work on commission – you may have to estimate, since your income may vary from month to month.
  2. List income you receive from any source, like a part-time job, a tax refund, gifts, unemployment, public assistance, dividends, and alimony or child support. Add the entries to determine your actual income for that month. Keep in mind, some of these amounts may fluctuate.
  3. List how much you deposit in savings each month from your take-home income, even if it’s only a small amount.
  4. List your fixed monthly expenses – the predictable, set amounts for the must-have items and services that you pay for each month – like rent or mortgage, car payment, and telephone, cable, or Internet access.
  5. List your variable expenses – the amounts that change, as well as the expenses you pay weekly, monthly, quarterly, semi-annually, or every year – like groceries, clothing, haircuts, property taxes, auto and homeowners insurance, and gas and electric. Divide variable expenses by 12 to get monthly average.
  6. List estimates for once-in-a-while expenses – like birthday and wedding gifts, or holiday gifts and entertainment.Divide variable expenses by 12 to get monthly average.
  7. Total your fixed, variable and once-in-a-while expenses to get a monthly estimate.

Congratulations! You have just done a simple budget.

If after paying your bills and putting money in savings, you still have funds, you can carry over the balance for the next month or use it for unexpected expenses. If this month’s balance is negative, look for ways to cut back on the variable expenses.

Your budget will be most helpful if you stay on top of it to make sure you’re tracking your income and expenses. Most people are amazed to see how much they can save just by paying attention to their cash flow! Remember that some major expenses come one or twice a year, not monthly. You can make sure you’re prepared by marking those expected events on a calendar and putting it in your budget to make sure you have the cash to pay for it rather than put it on an expensive credit card.

You can find more tips and tools to manage your money on the Federal Trade Commission’s website.