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How to make a budget

Learn about two main budgeting styles and discover where to go from there financially.

Checking in on your household's monthly budget once a year is a smart practice. The discipline will help you balance income and expenses while putting money toward financial goals, such as saving for college or paying off debt.

Consider the following tips to help you get started.

Popular Budgeting Methods

Find an approach that works best for you. Here's how to make a budget two different ways:

  • Zero-Based Budgeting: With this method, you assign every incoming dollar to a spending (or saving) category. The categories may cover current expenses or anticipated future expenses, such as car maintenance or holiday gifts.
  • The Balanced Money Formula: This method asks you to categorize your spending into three categories fixed costs, financial goals, and flexible spending. The categories should equal no more than 50%, 20%, and 30% of your monthly income, respectively.

Get Started with Budgeting

Follow these tips for creating a household budget.

  • Track all expenses for one month. Once you know where your money goes, you can adjust budget categories and future spending accordingly.
  • Set financial goals. Whether you want to pay down debt, save more for retirement or take a vacation, goals will help keep you accountable with your budget.
  • Review and adjust as needed. Because income and expenses can vary from one month to the next, you should regularly review your budget to see if your budgeted amounts are too high or low.
  • Use a budgeting tool. There are countless apps to help you manage your money. These tools may simplify budgeting, which may help you stick to it.

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