There are few of us who would attempt to build a house without following a blueprint. And for good reason: one poorly placed beam, and your home could come crashing down.

Yet when it comes to our finances, so many of us choose to forgo that all-important money blueprint: a budget. A 2013 Gallup poll found that a whopping two-thirds of Americans don’t have a detailed household budget.

But without a budget, it's hard to know how much money you have coming in and going out, much less whether you're able to reach any money goals you have for yourself. So we put together an easy-to-follow guide to setting and sticking to a successful budget — all in a month's time.


First things first: Where does your money actually go? Take the week to add up all your expenses in black and white. One strategy is to categorize your expenses using these guidelines:

Fixed costs: This bucket is for steady, predictable bills that are pretty much the same every month. Think utility bills, your rent or mortgage payment, a cellphone plan, your car loan and so on. Also include the minimum payments you have to pay on any credit cards or loans you have. Include bill due dates and interest rates, if applicable.

Financial goals: What big-picture money goals are you putting away for right now? Everything from the extra money you put toward eliminating debt to saving for a dream vacation to building up your emergency fund goes under this umbrella.

Non-monthly expenses: This category often gets overlooked, but we’re talking about bills that pop up at random times of the year — car registration fees, annual insurance premiums and the like.

To ensure these costs don't throw off your monthly budget, add up all non-monthly expenses for the year and divide by 12. Take that number and treat it as a monthly bill directed into a separate savings account, so the money will be at the ready when those non-monthly costs come due.

Flexible spending: This one’s reserved for day-to-day expenses that tend to go up and down each month, including things like entertainment, shopping, groceries and gas.

To pinpoint what your spending limit should be here, take your monthly take-home pay and subtract your fixed costs, financial goals and that monthly amount you're putting away for non-monthly expenses. Then divide what’s left by 4.3 — that’s how much you can spend each week in this category without busting your budget.


Whether you’re out to pay off your highest-interest student loan or increase your monthly retirement contributions, identify what your larger-scale goals are. Then break them down into month-sized increments (e.g., saving $100 a month for a vacation next summer, an extra $50 into an IRA). Add these to your monthly budget. Keep your list to two or three goals at a time to increase your odds of success.

Can you comfortably account for these goals in your budget, along with what you're spending day-to-day? If not, it's time to take another look at the numbers and see where you can cut back.


Here's where you may need to do some reallocating of your money, belt-tightening, or both. Now that you see where you spend your money and compared it with what your goals are, it's time to get serious.

To start, it's always important to be saving for retirement, even if it's just a small percentage of your salary, as well as working toward at least one month of household expenses saved in an emergency fund. So keep those goals as part of your budget, if you're not including them already. After that, figure out what you need to tackle next (hint: getting rid of high interest debt is always a good thing). Then think about other things you want to save for, like a starter home, a wedding or a vacation.

Ultimately, you'll find creating and sticking to a budget is a matter of trade-offs. Can you still work toward your priority goals with the amount you're spending now? It’s worth reasonably scaling back on flexible spending or cutting out larger recurring expenses if that ultimately gets you over the finish line of a big-picture goal. And here's a pro tip: Keep savings in a separate high-yield account so you're not tempted to tap into it.


Tracking your spending on a weekly basis is ideal — hence why we suggest dividing your flex spending by 4.3, so you always know how much you're working with each week. But you can check more frequently if it helps.

It's also important to do bigger picture check-ins periodically to see how you're progressing toward your goals. If your finances are commingled with your partner's try doing it together. These money meetings don’t have to formal — a cup of coffee and a few minutes of review should do the trick.

Whether you review your budget with a partner, on your own or with the guidance of a financial professional, use this time to get real about your financial habits. This might involve recalibrating goals, making a plan to reel in overspending, and, best of all, celebrating milestones with an in-budget treat.

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