Creating a Personal Budget

Published on June 9th, 2015

Have you ever had this thought: “How did I already spend all of that money?” Or this: “I could have sworn I had more in my account!” If you find a disconnect between the money that you actually have and the money you perceive you have, creating a budget is probably the answer. This is a simple, user friendly guide to creating a budget for your personal finances. It doesn’t have to be strenuous or overly-detailed. It just has to give you insight to where your money is going and how to alter your behavior to save. The steps to creating a budget are as follows:


  1. Define Goals

These goals can be whatever you want them to be. Just make sure that they are specific! They can range from paying your bills to saving up for a vacation, or even saving up enough for a down payment on a house. Whatever they are, make sure you set a specific number amount you would like to reach, and by what date you would like to have that amount.


  1. Identify Inflows

Choose a time frame for which you would like to set your budget, and identify all sources of income for that given time frame. Add all of them up to get a base number.


  1. Identify Outflows

Get in the habit of writing down all the purchases and payments you make. Online banking is a powerful tool for this step, as all of this data is readily available without much work on your end.


  1. Categorize Spending

Take the list of cash outflows that you compiled above, and put them into either a “needs” or “wants” column. Needs will be things like rent, groceries, childcare (if applicable), etc. Wants will include all other extraneous spending like going to restaurants, movies, concerts, etc. Sum up the columns to see how much you’ve spent. Use expenditures from the time frame you selected in Step 2 (if you chose a month, then look at expenditures from the past month).


  1. Prioritize Spending

Take the income you found in Step 2, and subtract the number you calculated under the “needs” column. Your needs should always take priority over your wants. The remaining balance is what you will have to allocate between “wants” and saving for the goal defined in Step 1. You will need to allocate how much of the remaining income you would like to put away in order to reach your goal by the specified time, and how much of it you can spend on wants.


For more tips on how to create a budget, click on the links below. If your budget comes up short, and you find yourself in need of some quick cash, consider a loan from Short Term Loans. For more information about Short Term Loans, visit


Courtesy of…

Personal Finance@Duke

Practical Money Skills

Money Management International

Back to News