Budget: a financial document that helps people manage money. Budgets are used by governments, businesses, and individuals/households of all income levels. A budget provides a framework to make informed decisions about spending, saving and investing. A well-crafted budget can help reduce debt, increase savings, achieve financial goals, and prepare for major life events.

Start by identifying your fixed expenses. These are expenses that remain roughly the same each month, such as rent or mortgage, utilities, cell phone service, garbage service, etc. You may also want to include auto insurance, healthcare costs, and any other monthly bills you have. Next, identify your variable expenses. These are expenses that vary from month to month, such as food, entertainment, and gifts. It’s helpful to look at your past credit card or bank statements for this information. Once you have a list of all your expenses, subtract your total net monthly income from your gross monthly income. This will give you an idea of how much you can afford to spend each month.

Then, consider whether there are any areas where you can cut back on expenses. For example, you may be able to save money by packing your own lunch or eating out less. Alternatively, you could reduce spending by eliminating unnecessary items or services (such as subscribing to a streaming service you rarely use or going to the movie theater instead of seeing one at home). Another option is to set aside an amount each month for fun activities or personal treats. This can eliminate the guilt that often accompanies impulse spending, because you know that expense is pre-planned and will not detract from your ability to meet your other financial goals.