How to Create a Monthly Budget
A monthly budget is the most important tool for controlling your personal finances. It lets you know exactly where your money goes and how much you can save.
The 50/30/20 Rule
The most popular and easiest method to implement:
50% — Needs
Essential expenses you can't avoid:
- Rent or mortgage
- Groceries
- Utilities (water, electricity, internet)
- Transportation
- Health insurance
30% — Wants
Expenses that improve quality of life but aren't essential:
- Entertainment and outings
- Non-essential shopping
- Subscriptions (Netflix, Spotify)
- Restaurants and dining out
- Hobbies
20% — Savings & Investment
Your financial future:
- Emergency fund (3-6 months of expenses)
- Goal savings (travel, car, home)
- Investments
- Extra debt payments
The 70/20/10 Rule
A more realistic alternative for beginners:
- 70% for total expenses (needs + wants)
- 20% for savings
- 10% for investment or debt payoff
Tips for Sticking to Your Budget
- Track everything: every expense, no matter how small
- Review weekly: don't wait until month's end
- Automate savings: transfer to savings on payday
- Be realistic: an overly strict budget is hard to maintain
- Adjust monthly: your needs change, so should your budget