Adulting 101: How to make a budget plan

January 31, 2023

Once you understand your monthly spending habits, you’ll be able to make adjustments and empower yourself to save for the future.

Establishing a monthly budget is an essential first move toward making your short- and long-term financial goals a reality. Follow these eight simple steps to get started.

 

Step 1: Know your financial goals

Start by defining your goals for budgeting. Are you looking to get out of debt? Hoping to reduce overspending in certain areas? Wanting to save up for a major purchase? Focusing on objectives will help you make important budget decisions – and keep you motivated to stay on track.

 

Be specific about your goal and, if necessary, set a deadline. For example, if your long-term goal is to own a home, a measurable goal may be to save $50,000 (or X amount) in five years (X amount of time) for a down payment.

 

Step 2: Record your monthly income

Figure out your total net (aka “take-home”) income and record it as a monthly amount. Be sure to include all sources of income. If you’re starting a new job, an online paycheck calculator can give an accurate estimate of your after-tax earnings.

 

Step 3: List your monthly expenses

Make a detailed list of everything you spend (or plan to spend) money on in a given month, including:

 

  • All payments you make on a monthly basis (e.g., rent or mortgage, utilities, car payment)
  • The average monthly cost of expenses that you pay quarterly, semiannually or annually (e.g., car insurance, property taxes, some utilities)
  • The average cost of purchases that typically occur each month but can vary from month to month (e.g., eating out, groceries, dry cleaning, gifts)
  • An amount for unforeseen expenses (e.g., a car repair or an appliance replacement)

Scan through recent bank statements and receipts to catch small or random purchases. These may be easy to miss but can quickly eat up big portions of your paycheck.

 

Don’t forget to list an amount for short-term and long-term savings. Saving is easiest when it’s a built-in part of your monthly budget.

 

Step 4: Divide up fixed and variable expenses

Sort your expenses into two categories: fixed and variable. Fixed expenses occur regularly and cost the same amount each month or year, like rent or mortgage, insurance payments and subscriptions. (Tip: Include savings in this category, too.)

 

Variable expenses change from month to month, such as groceries, gas, clothing, entertainment, etc. Expenses in this category are often more flexible, making them easier to adjust to fit your budget. Identifying these will come in handy once you start thinking about ways to cut costs.

 

Step 5: Add up all your income and expenses

Add up your income and all your listed expenses. You’ll come up with one of three results:

 

  • Your income exceeds your expenses: Great! Now look at using some of that “extra” to pay off debt or add money toward short- and long-term goals. You may even find you can reduce spending in certain areas to further boost your savings.
  • Your income equals your expenses: It’s a good start, but spending less than you earn is essential to protect against the unexpected and achieve financial goals. Look for ways to cut costs so you can set aside some extra savings each month.
  • Your expenses exceed your income: This is a situation that you’ll want to analyze and take steps to correct. If you’re unable to reduce your expenses by a sufficient amount, consider ways to increase your income.

 

Step 6: Create a new spending plan

Take a look at your expenses and honestly identify the categories you can cut back on or eliminate. If you’re stuck, try recording everything you buy over a period of a week or two. A month is even better. You may be surprised by how easy it is to rack up “little” purchases that really add up. Luckily, there are many simple ways to cut costs that don’t require much effort or major changes to your lifestyle.

 

Step 7: Record spending and track progress

Once you’ve set up your budget, stay on top of it by tracking your expenses in each category. Keeping a close eye on where your money’s going will prevent you from overspending. You can do it manually by paper or with an online spreadsheet. Or you can track each transaction with a budgeting app such as Mint or YNAB.

 

Step 8: Review and revise your budget plan as needed

Regularly evaluating and improving your budget is the key to budgeting successfully. Review it each month and adjust any categories that are consistently lower or higher than planned.

 

Monthly budget template

To help get you started we've provided a printable monthly budget template (PDF) so you can see where your money is going.  

Tip: Do a deeper dive each year to make sure your budget is keeping you on track to reach your goals.

 

 

Learn more and take your budget to the next level with these budgeting tips to help track your spending and save.

Related content

Common small business banking questions, answered

How compound interest works

Retirement savings by age

How to track expenses

How to build wealth at any age

Good money habits: 6 common money mistakes to avoid

Loud budgeting explained: Amplify your money talk

What to do with your tax refund or bonus

5 tips for parents opening a bank account for kids

Investment strategies by age

These small home improvement projects offer big returns on investment

Reviewing your beneficiaries: A 5-step guide

Webinar: Mortgage basics: Finding the right home loan for you

5 financial goals for the new year

How to get started creating your business plan

How to financially prepare for pet costs

The lowdown on 6 myths about buying a home

10 ways to increase your home’s curb appeal

How to Adult: 5 ways to track your spending

What documents do you need after a loved one dies?

Checklist: financial recovery after a natural disaster

Checklist: 10 questions to ask your home inspector

Closing on a house checklist for buyers

Family planning for the LGBTQ+ community

How to plan and save for adoption and in vitro fertility treatment costs

Preparing for adoption and IVF

11 essential things to do before baby comes

Webinar: Uncover the cost: Starting a family

What’s the difference between Fannie Mae and Freddie Mac?

Changes in credit reporting and what it means for homebuyers

3 signs it’s time for your business to switch banks

3 tips for saving money when moving to a new home

5 ways to maximize your garage sale profits 

Pros and cons of a personal line credit

Tips for handling rising costs from an Operation HOPE Financial Wellbeing coach

Tips to earn that A+ in back-to-school savings

How to manage money tips

For today's homebuyers, time and money are everything

How to choose the right business checking account

Mindset Matters: How to practice mindful spending

Uncover the cost: International trip

Uncover the cost: Wedding

A who’s who at your local bank

4 reasons why estate planning is important

LGBTQ+ retirement planning: What you need to know

What is Medicare? Understanding your coverage options

Using 529 plans for K-12 tuition

Retirement plan options for the self-employed

Is a Health Savings Account missing from your retirement plan?

How to open and invest in a 529 plan

How to manage your finances when you're self-employed

How much life insurance do I need?

How grandparents can contribute to college funds instead of buying gifts

Safeguarding the payment experience through contactless

COVID-19 safety recommendations: Are you ready to reopen?

What corporate treasurers need to know about Virtual Account Management

High-cost housing and down payment options in relocation

Insource or outsource? 10 considerations

How to choose the right custodian for your managed assets

Buying or leasing? Questions to ask before signing a contract

Finance or operating lease? Deciphering the legalese of equipment finance

Common pitfalls to avoid in the equipment financing process

Housing market trends and relocation impact

Does your side business need a separate bank account?

Meet your business credit card support team

The costs of hiring a new employee

5 steps to take before transitioning your business

Make your business legit

How to establish your business credit score

Talent acquisition 101: Building a small business dream team

10 tips on how to run a successful family business

How to sell your business without emotions getting in the way

How to improve your business network security

5 things to know before accepting a first job offer

How to save money while helping the environment

Planning self-care moments that matter (and how to finance them)

How to expand your business: Does a new location make sense?

Is raising backyard chickens a good idea financially?

Working with an accountability partner can help you reach your goals

7 steps to prepare for the high cost of child care

What are conforming loan limits and why are they increasing

How to decide when to shop local and when to shop online

How to save for a wedding

How I did it: Turned my side hustle into a full-time job

Stay on budget — and on the go — with a mobile banking app

Multiple accounts can make it easier to follow a monthly budget

5 things to consider when deciding to take an unplanned trip

How to talk to your lender about debt

Stay committed to your goals by creating positive habits

5 tips for creating (and sticking to) a holiday budget

For today's relocating home buyers, time and money are everything

Crypto + Relo: Mobility industry impacts

How to test new business ideas

How can I help my student manage money?

How to increase your savings

Bank from home with these digital features

7 steps to keep your personal and business finances separate

3 types of insurance you shouldn’t ignore

Is your employer long term disability insurance enough?

8 steps to choosing a health insurance plan

7 things to know about long-term care insurance

Preparing for retirement: 8 steps to take

How I did it: Switched career paths by taking an unexpected pivot

5 unexpected retirement expenses

Year-end financial checklist

6 tips for trust fund distribution to beneficiaries

Key components of a financial plan

Comparing term vs. permanent life insurance

Achieving their dreams through a pre-apprenticeship construction program

4 steps to finding a charity to support

How to winterize your vehicle

Don’t underestimate the importance of balancing your checking account

Protecting cash balances with sweep vehicles

6 questions students should ask about checking accounts

How to gain financial independence from your parents

The secret to successful service provider integration

What you need to know as the executor of an estate

How to build a content team

Webinar: ESG for Corporations: Building an all-weather, long-lasting strategy

Do your investments match your financial goals?

Can fantasy football make you a better investor?

Year end tax planning tips

Credit: Do you understand it?

How to manage money in the military: A veteran weighs in

A beginner's guide to investing

How do I prequalify for a mortgage?

Can you take advantage of the dead equity in your home?

Home equity: Small ways to improve the value of your home

Webinar: Mortgage basics: How much house can you afford?

8 steps to take before you buy a home

Is a home equity line of credit (HELOC) right for you?

Webinar: Mortgage basics: 3 Key steps in the homebuying process

Webinar: Mortgage basics: Buying or renting – What’s right for you?

How to use your home equity to finance home improvements

Webinar: Mortgage basics: What is refinancing, and is it right for you?

Should you get a home equity loan or a home equity line of credit?

5 things to avoid that can devalue your home

6 questions to ask before buying a new home

What is refinancing a mortgage?

What is an escrow account? Do I have one?

Quiz: How prepared are you to buy a home?

10 questions to ask when hiring a contractor

What to know when buying a home with your significant other

Webinar: Mortgage basics: How does your credit score impact the homebuying experience?

What is a home equity line of credit (HELOC) and what can it be used for?

Dear Money Mentor: When should I refinance a mortgage?

Building a dream home that fits your life

Are professional movers worth the cost?

Beyond the mortgage: Other costs for homeowners

How I did it: Bought my dream home using equity

Get more home for your money with these tips

Saving for a down payment: Where should I keep my money?

4 ways to free up your budget (and your life) with a smaller home

How I did it: Built living spaces to support my family

Managing the impacts of appraisal gaps in a hot housing market

Is it the right time to refinance your mortgage?

Spring cleaning checklist for your home: 5 budget-boosting tasks

Overcoming high interest rates: Getting your homeownership goals back on track

Money Moments: How to finance a home addition

Home buying myths: Realities of owning a home

House Hacks: How buying an investment property worked as my first home

Should you buy a house that’s still under construction?

10 uses for a home equity loan

Know your debt-to-income ratio

Your guide to breaking the rental cycle

Travel for less: Smart (not cheap) ways to spend less on your next trip

Should you buy now, pay later?

U.S. Bank asks: Do you know what an overdraft is?

Tips for working in the gig economy

Which is better: Combining bank accounts before marriage — or after?

Tips to overcome three common savings hurdles

Money Moments: 8 dos and don’ts for saving money in your 30s

Save time and money with automatic bill pay

Money Moments: 3 smart financial strategies when caring for aging parents

Helpful tips for safe and smart charitable giving

Growing your savings by going on a ‘money hunt’

Why a mobile banking app is a ‘must have’ for your next vacation

Tips to raise financially healthy kids at every age

Is it time to get a shared bank account with your partner?

How I kicked my online shopping habit and got my spending under control

Friction: How it can help achieve money goals

It's possible: 7 tips for breaking the spending cycle

What to consider before taking out a student loan

Financial checklist: Preparing for military deployment

Here’s how to create a budget for yourself

Common unexpected expenses and three ways to pay for them

Webinar: Common budget mistakes (and how to avoid them)

Checking and savings smarts: Make your accounts work harder for you

Are savings bonds still a thing?

3 awkward situations Zelle can help avoid

Allowance basics for parents and kids

9 simple ways to save

Do you and your fiancé have compatible financial goals?

3 ways to keep costs down at the grocery store (and make meal planning fun)

What military service taught me about money management

6 pandemic money habits to keep for the long term

From LLC to S-corp: Choosing a small business entity

Is online banking safe?

8 tips and tricks for creating and remembering your PIN

Recognize. React. Report. Don't fall victim to financial exploitation

Recognize. React. Report. Caregivers can help protect against financial exploitation

Webinar: U.S. Bank asks: Are you safe from fraud?

College budgeting: When to save and splurge

How I did it: Paid off student loans

The A to Z’s of college loan terms

How to save money in college: easy ways to spend less

Unexpected cost savings may be hiding in your payment strategy

Costs to consider when starting a business

Questions to ask before buying a car

Webinar: Uncover the cost: Building a home

Webinar: Mortgage basics: Prequalification or pre-approval – What do I need?

Adulting 101: How to make a budget plan

You can take these 18 budgeting tips straight to the bank

How I did it: Learned to budget as a single mom

Multigenerational household financial planning strategies

Buying a home Q&A: What made three homeowners fall in love with their new home

Your 4-step guide to financial planning

Working after retirement: Factors to consider

What types of agency accounts are available for investors?

Personal loans first-timer's guide: 7 questions to ask

Consolidating debts: Pros and cons to keep in mind

Improving your credit score: Truth and myths revealed

Should I itemize my taxes?

Dear Money Mentor: How do I set and track financial goals?

Retirement income planning: 4 steps to take

Lost job finance tips: What to do when you lose your job

LGBTQ+ financial planning tips

Understanding guardianship and power of attorney in banking

What I learned from my mom about money

Financial gifts can be a valuable – and fun – choice for the holidays

What financial advice would you give your younger self?

Essential financial resources and protections for military families

How to stop living paycheck to paycheck post-pay increase

Practical money tips we've learned from our dads

What you need to know about renting

What’s in your emergency fund?

Certificates of deposit: How they work to grow your money

Dear Money Mentor: How do I pick a savings or checking account?

Car shopping: Buying versus leasing your next vehicle

How I did it: Deciding whether to buy an RV

What you should know about buying a car

Take the stress out of buying your teen a car

Practical money skills and financial tips for college students

Tips for navigating a medical hardship when you’re unable to work

Money management guide to financial independence

Money Moments: How to manage your finances after a divorce

Personal finance for teens can empower your child

5 reasons why couples may have separate bank accounts

U.S. Bank asks: Transitioning out of college life? What’s next?

Co-signing 101: Applying for a loan with co-borrower

Key milestone ages as you near and start retirement

How to use debt to build wealth

How to talk about money with your family

How to build credit as a student

30-day adulting challenge: Financial wellness tasks to complete in a month

How to retire happy

How to protect your digital assets in your estate plan

Money Moments: Tips for selling your home

How I did it: My house remodel

First-timer’s guide to savings account alternatives

Does your savings plan match your lifestyle?

Resources for managing financial matters after an unexpected death

Webinar: Uncover the cost: College diploma

How I did it: Bought a home without a 20 percent down payment

Transitioning from the military to the civilian workforce

Crypto + Homebuying: Impacts on the real estate market

Myths vs. facts about savings account interest rates

Military homeownership: Your guide to resources, financing and more

U.S. Bank asks: Do you know your finances?

Break free from cash flow management constraints

Webinar: Uncover the cost: Home renovation

Webinar: Bank Notes: College cost comparison

How you can prevent identity theft

Do I need a financial advisor?

Good debt vs. bad debt: Know the difference

Preparing for homeownership: A guide for LGBTQ+ homebuyers

Parent checklist: Preparing for college

U.S. Bank asks: What do you know about credit?

Financial steps to take after the death of a spouse

Estate planning documents: Living trusts vs. will vs. living will

Annual insurance review checklist

7 financial questions to consider when changing jobs

Webinar: 5 myths about emergency funds

How to best handle unexpected expenses

Unexpected cost savings may be hiding in your payment strategy

Checklist: 6 to-dos for after a move

Disclosures

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.