Information from the Washington State Department of Financial Institutions

How to create a budget

A budget is a plan of how you will spend your money. Budgeting is not just about pinching pennies but rather creating a plan to reach your financial goals.

Why budgeting is helpful

A budget helps you determine how you want to spend your money. By creating and sticking to a budget, you can:

  • Track your income and expenses
  • Prioritize your spending
  • Save for short-term and long-term goals
  • Avoid overspending
  • And pay down debt

Creating your budget

  • Identify Income:
    Identify all sources of income, including wages, salaries, and any additional sources such as side hustles or investment returns.
  • Determine Your Expenses:
    List all your expenses, including fixed expenses like rent or mortgage payments, utilities, and groceries, as well as variable expenses like entertainment and dining out. Fixed expenses stay the same each month and variable expenses change each month.
  • Prioritize Your Expenses:
    Determine which expenses are essential and which ones can be reduced or eliminated to align with your financial goals.
  • Assign Where Your Money Goes:
    Assign specific amounts to each expense category based on your income and priorities. Remember to include savings contributions and debt payments in your budget.
  • Take Advantage of Apps and Worksheets:
    There are many apps and worksheets that can help. See our resources below to get started.

Budgeting Tips

  • If you usually spend less than you earn...
    You can use a budget to work out how much you can save each payday and flow this towards saving or investing.
  • If you usually spend more than you earn…
    You can use a budget to see where that money is going. See if there are ways to spend less or earn more.
  • The best budgets keep getting revised
    After developing a budget, it’s helpful to track to see how it’s working. This way, you can see what's working and refine it over time
  • Prioritize saving
    Treat savings as a non-negotiable expense and prioritize it in your budget.
  • Plan for emergency expenses
    Anticipate irregular expenses like car repairs, medical bills, or holiday gifts by setting aside a portion of your budget each month for these purposes.
  • Seek professional advice if needed
    If you're struggling to create or stick to a budget, consider seeking help from a financial advisor or counselor. They can provide personalized guidance and strategies to help you achieve your financial goals.

Here are some more resources

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