6 Steps to Make a Budget

9/6/2021 Marine Bank

When it comes to budgeting, it's hard to know where to begin. Don't let that stop you from taking control of your financial life. Here are the 6 steps you need to know to build your budget and make sure you stick with it

Step 1: Add up your income

List out all of your monthly income. This might simply be your salary, but if you have a side job or own a second business, you will need to include the money you earn from those as well. Don't leave anything out. If your income isn't consistent each month, use the average of 3 months worth of income.

Step 2: Track your needs

Add up all of your essential monthly expenses. These are your "needs." Anything you need should be included, such as: rent/mortgage, water, gas, groceries and debt/loan payments. If you're not sure about all of your expenses, take a look at your bank statements from the past 3 months to get a more accurate breakdown.

Step 3: Set your goals

For any action to become a habit, you have to know why you want it. So take a moment to ask yourself what your financial goals are and how your budget gets you there. Some examples are: getting out of debt, saving for retirement, building up a comfortable savings for unexpected expenses, or saving for a big purchase like a house or vehicle. Make sure you add your goals as expenses in your budget. Here's more information on how to figure out your financial goals. 

Step 4: Track your wants

Add up your expenses that are not essential. These are your "wants," and they include things that are extra or more of a luxury. These include things like going to the movies, eating out, taking vacations or buying designer clothes. 

Step 5: Fill out your budget

Now it's time to draft your budget and subtract your total expenses from your income. If you end up with a positive number, you're off to a great start! If you break even you may want to consider giving yourself some room for unexpected expenses, savings or some additional "wants." A negative number means you're spending more than you're making. Assess your expenses and figure out how you can lower them. This is a common obstacle for people as they build their budget, so don't be discouraged. If you find it hard to cut down your expenses, here are a few questions to ask yourself.

Step 6: Monitor and adjust 

Now that you have a budget, check it regularly and adjust it to meet your financial needs. You might have an idea of how things will play out, but sometimes life happens differently than we anticipate. Keep up with your budget regularly (at least once a week) to stay on track and reach your financial goals.


No matter how you get started - notebook paper, spreadsheet or budgeting app - just make sure you start!

It might be hard to figure out your budget for the first few months, but stick with it. As you reassess and adjust your budget, you're on the path toward your financial goals.


Did you find this helpful? Leave a comment below if you’d like to know more about this subject or if you’d like us to dive into another financial topic.


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