Take charge of your finances by creating a budget and sticking to it. A budget can help you pay your bills on time, cover unexpected emergencies and reach your current and future financial goals. Most of the information you need to create a budget is already at your fingertips. 
Start by following these simple steps to help get a clear picture of your monthly finances. 
Calculate your income  
To set a monthly budget, you need to determine how much income you have. Make sure you include all sources of income such as salaries, interest, pension and any other income sources, including a spouse’s income if you’re married. Using our home budget calculator, click the “Edit” button next to “Net Monthly Pay” and enter a dollar figure next to each relevant income source. Make sure that the figure you write down is the amount you receive from each income source on a monthly basis. 
If you get a salary, be sure to use your take-home pay, not your gross pay. Taxes are usually taken out automatically, but if they’re not, remember to include them as another expense. If you receive money from somewhere not listed, enter the source of that money along with the amount under "other income." 
Once you have entered all of your income sources, click “Apply.”  
Estimate expenses  
It is a good practice to keep track of how much you spend each month. Using our home budget calculator, click the “Edit” button next to “Monthly Expenses” and enter a dollar amount next to each relevant expense. Some of your bills will vary from month-to-month, so use a monthly average. For example, if your cell phone is $45 one month and $55 the next, estimate $50 per month. For annual bills, divide the yearly cost by 12 for a monthly figure.  
As you review your expenses, note that rent or mortgage payments plus your credit obligations should not exceed 35 to 40 percent of gross monthly income. Also, the amount you owe on credit cards, monthly car payment, student loans and other monthly payments should not exceed 10 to 15 percent of your take-home pay. 
Once you have entered all of your expenses, click “Apply.”  
Figure the difference 
Once you’ve entered your monthly income and then your monthly expenses and hit “Apply,” the calculator will show you the difference by stating what is left available for savings. 
If your income and expenses are equal: 

  • You might be living paycheck to paycheck. Cut expenses and develop a savings plan in case of emergencies or unexpected expenses. Use our benefit of spending less calculator to see just how much your budget reductions may be worth.  
  • If your income and expenses equal each other, but only because you're using credit to survive and paying only minimums each month, you may need to talk to a debt counseling service to help you get back on the track to live within your means.
    If your total was negative: 

  • You need to make adjustments immediately. Keep in mind that it's usually easier to cut back on expenses than to increase your income. Analyze your budget to see where you can cut expenses – especially from non-essential spending categories. Use our benefit of spending less calculator to see just how much your budget reductions may be worth.
  • Call your utility, phone, cable, cell phone providers. There may be ways to cut those bills that just take a phone call to find out.  
  • Consider increasing your income by getting a second part-time job or by working overtime.
    If you have money leftover at the end of the month, you're doing a good job of managing your expenses. Some suggestions of what you could do with the leftover money:  

  • Open a savings account.  
  • If you already have a savings account, consider setting up automatic transfers to your savings account or, if you have direct deposit, ask your employer to put a portion of your paycheck automatically in to your savings account.  
  • Investigate whether your employer offers a 401(k) or other employee matching savings plan. The contribution you make to this type of account is taken out of your paycheck before taxes.
    Ongoing monitoring 
    Once you’ve created your budget, be sure to continually monitor it to make adjustments as needed in order to achieve your financial goals and stay on track. 

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