What is a Budget?
A budget is a plan for your income and expenses. It tells your money where to go—on purpose.
- Income: Paychecks, tips, side jobs, benefits.
- Fixed expenses: Rent, car payment, insurance.
- Variable expenses: Groceries, gas, utilities, fun.
- Savings & debt payments: Emergency fund, credit card, loans.
A Simple Rule: 50/30/20
Start with this guide. Adjust later to fit your life.
- 50% Needs: Housing, utilities, groceries, transport, insurance.
- 30% Wants: Eating out, entertainment, subscriptions.
- 20% Savings/Debt: Emergency fund, extra debt payments, investments.
Tip: If needs are more than 50%, reduce wants first, then look for ways to lower fixed costs.
Starter Monthly Budget (Example)
| Category | Planned | Actual |
|---|---|---|
| Income (net) | $2,800 | — |
| Rent | $1,100 | — |
| Utilities | $150 | — |
| Groceries | $350 | — |
| Transport | $200 | — |
| Wants (fun) | $300 | — |
| Savings/Debt | $700 | — |
Use any notes app or spreadsheet to track “Actual” amounts each month.
Mini Exercise
- Write your monthly net income (after tax).
- List your fixed expenses (rent, car, insurance).
- Estimate variable expenses (groceries, gas, phone, fun).
- Choose a savings target (e.g., $50/week → $200/month).
Keep it simple. Done is better than perfect.