![]() This is when you compare your net income to your monthly expenses to see where you stand. Make adjustments depending on what your budget reveals: The final step in creating a budget is the most telling.It's easiest to do this step while looking at your bank account and credit card statements from the past month. Determine the average monthly costs for each expense: List how much you spend on each expense per month and add them all up.This is an important step in the process because it helps you see where you can cut back if you need to. Your dining, travel, clothing (beyond the basics), subscriptions and memberships are variable costs. Examples of fixed costs are rent, utility bills, transportation, insurance, food and loan payments. Label the monthly expenses as fixed or variable: Go through your list of monthly expenses and now label each as a fixed (essential items) or variable cost (nonessential items).Also include in this category your savings contributions, such as in a 401(k) or high-yield savings account. Common monthly expenses include rent or mortgage payments, utility bills, loan payments, insurance costs, transportation, child care, groceries, dining, household goods, travel, streaming subscriptions and memberships. List your monthly expenses: Next, you want to look at your monthly costs (your cash outflow).Your net income is the amount of money you earn after taxes and can be found on the pay stub you receive through your employer. Calculate your net income: First, find out how much money you make each month (your cash inflow).Making a budget can be done in as little as five steps: (Learn more in the app's review.) How do you create a budget? Users can set goals, customize spending categories, plus get access to 100+ free educational workshops offered every week. A popular choice is budgeting app You Need A Budget (YNAB), which offers a 34-day free trial then costs $84 per year, or $11.99 per month. While the top-rated tools on this list come no cost to users, those who don't mind paying a premium have options for budgeting tools with more robust features. ![]() You'll also want to decide if you want to pay for a budgeting tool. Hands-on methods, such as manually enter your transactions into a spreadsheet, may take more time, but the process can help you be more thoughtful about your spending. That tool might be an already-formatted spreadsheet where you just plug in your transactions, or an app that auto-categorizes your spending for you.īecause different budgeting tools offer slightly different approaches to tracking your money, first decide how intentional you want to be.
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