Your first budget in 20 minutes

Do it like this

1. Gather your pay stubs and bills. That's where the government's budget guide says to start. Source: consumer.gov¹ Pull up your last two or three months of bank activity too, so you work from real numbers instead of guesses.
2. Write down your monthly take-home pay. Use the net pay on your stub, after taxes and deductions. If you're paid every two weeks, multiply one paycheck by 26 and divide by 12. If your pay changes month to month, add up last year's income and divide by 12. Source: consumer.gov¹ Include any other regular money you get.
3. List your fixed bills with due dates. These are rent, utilities, phone, internet, insurance, car payment, loan minimums and subscriptions. Put each due date on a calendar. The CFPB notes that coming up short is often a timing problem, with bills landing before payday. Source: CFPB²
4. Add once-a-year and irregular costs as a monthly amount. Car registration, a yearly insurance premium, renewal fees, gifts and the holidays are real bills that just don't arrive monthly. Add up a year's worth and divide by 12, then set that amount aside every month.
5. Make savings a line item. The government's guide suggests listing savings as one of your expenses, not whatever is left over. Source: consumer.gov¹ Even a small automatic transfer on payday counts.
6. Estimate everyday spending from your statements. Groceries, gas, eating out, clothes and fun. If that feels overwhelming, the CFPB suggests starting with one week at a time and including small purchases, like buying lunch, that add up. Source: CFPB²
7. Subtract everything from your income. The answer should be more than zero. If it's less, you're spending more than you make, so look for things to change. Source: consumer.gov¹
8. Check your housing number. HUD counts a household as cost-burdened when housing costs, including utilities, are more than 30% of monthly income, and severely burdened above 50%. Source: HUD³ If yours is over 30%, the rest of the budget gets tight fast, so a roommate or a cheaper place may matter more than cutting coffee.
9. Track it and redo it monthly. Each day, write down what you spent. At the end of the month, compare it with your plan and adjust next month's plan. Source: consumer.gov¹

Example: $2,400 a month take-home

These are made-up numbers to show the method. Use your own.

Costs people forget

• Renters insurance and car insurance, especially when paid once or twice a year.
• Car registration, inspection, oil changes and tires.
• Medical copays and prescriptions.
• Subscriptions and free trials that turned into paid ones.
• Haircuts, toiletries and cleaning supplies.
• Birthdays, holidays and travel home.
• Bank or card fees, and the minimum payments on any debt.

If the numbers come out negative

• Cut flexible spending first: eating out, subscriptions, shopping.
• Shop around for big fixed bills when they come up for renewal: phone plan, insurance, internet.
• If one bill always lands before payday, call the company and ask whether you can move the due date.
• If rent is the problem, that's the biggest lever. A roommate or a cheaper place changes everything else.
• Look at income too: more hours, a second job, or benefits you may qualify for.

If it doesn't work

• If you keep forgetting to track, check your bank app once a week instead of every day. A weekly look beats a perfect plan you quit.
• If your income is irregular, budget from your lowest normal month and save the extra in good months. The government's divide-by-12 method gives you the average. Source: consumer.gov¹
• If you want ready-made forms, the CFPB's Your Money, Your Goals toolkit has free income trackers, spending trackers, bill calendars and budget worksheets.