Build your budget in 3 easy steps
Step 1: How to figure out your monthly income
Ready to get started? To use our monthly budget calculator, first you need to figure out your monthly income. Remember, this is the amount you can spend every month, so be sure to use your net income — which is the money you’re left with after taxes and deductions for things like health insurance and your 401(k), not your gross income, which is your total pay before any deductions.
To determine what to enter under Salary/Wages in the budget calculator, follow these steps:
- If you get paid a regular check once a month, enter your net income after deductions each paycheck.
- If you get paid twice a month, add the take-home amount of your two checks together and enter that amount.
- If you get paid every other week, multiply your take-home amount by 26 for the number of checks you get each year, and then divide by 12 to get your monthly take-home pay. Enter that amount in the budget calculator.
- If your income changes from month to month, add up your total monthly deposits for the last 3 months and divide that number by 3 to get a baseline monthly estimate. Enter that amount in the budget calculator. If the last 3 months were unusually high or low, add up all your deposits for the past year instead and divide by 12 to get a better average.
If you have additional income such as a side hustle, or you receive child support, alimony, or other supplemental income, add that monthly amount under Other Income.
You can also use this section to add a second income if you’d like to create a joint budget.
Step 2: How to determine and enter monthly expenses
Once you’ve figured out how much money you’re bringing in each month after taxes, you’ll need to figure out how much you need to spend on your monthly expenses. Some of these costs, like rent and car payments, will be specific numbers. Others, like groceries and entertainment expenses, will be estimates.
Let’s get started:
Housing Expenses
Mortgage or Rent: Whether you own or rent, you’ll need to factor in your housing expenses. Enter the amount of your monthly mortgage payment in the mortgage box, or the amount of your monthly rent in the rent box of the budget calculator.
If you own your home and your property taxes are not included in your mortgage payment, divide those taxes by 12 and add it to your mortgage — the goal is to ensure that your property taxes are covered in your monthly budget.
HOA Fees: If your neighborhood has a HOA, you need to make sure you account for your fees in the budget calculator. Have a yard full of pink plastic flamingos because you’ll never answer to a HOA? Leave the box blank.
You can also use this box for other home-related expenses like storage rental fees, monthly pet fees, parking fees, or any costs that aren’t otherwise covered in this section of the budget maker.
Home insurance: This box is for home insurance or renter’s insurance. If your home insurance is wrapped up in your monthly mortgage payment, don’t worry about it adding in this section — you don’t need to account for the payment twice.
Repairs/Maintenance: If you rent, your landlord is most likely the party responsible for any repairs around the house. Unless you have a specific agreement with your landlord to fix things around your rental property, you can leave this section blank.
If you’re a homeowner or renter who is responsible for maintenance and repairs, you’ll want to try and estimate what you spend per month — which can be difficult. You can go months without incurring any repair and then have to replace your entire roof, so try to put together a rough estimate — it’s always better to overestimate and be prepared.
If you’re not sure what to enter in the budget calculator, here are 3 ways to approach the problem:
- Do the best you can to estimate a monthly cost
- Choose an amount to set aside every month toward a maintenance “fund”
- Use your “emergency fund” to cover maintenance and repairs
If you decide to use your emergency fund, leave the box blank. There will be a box later for your emergency fund contributions.
Water/Gas/Electricity: Utility bills can also be tough to estimate — they can vary month to month based on the weather in your locale. Estimate an amount for your utility expenses based on the last 3 months of payments or the past year.
If you spend a fortune in the summer months on A/C or keep that heat pumping in the wintertime, do an aggregate based on your most expensive bill and your cheapest one and divide that number by two.
If you pay for water bills separately, your provider will often include a sewage fee. If that fee is not included in your municipality, be sure to add that expense in the budget calculator using this line item.
Cable/TV/Internet: If you have a provider who takes care of all your tech utilities, you’ll only have one bill, so you can simply enter the monthly amount in the budget calculator here.
If you get TV and internet service from different providers, add those bills together and enter the amount here.
Phone/Cell: If you have both a home phone and a cell phone, remember to include them both. If you’re creating a joint budget and you each have separate cell service, remember to include both bills in the budget calculator by adding them together.
Transportation Expenses
Car Payment: Whether you’re paying off a loan on a brand-new 2023 Corvette or you’ve leased a used Fiat Panda, you need to account for your monthly payment — enter the amount in the budget calculator here. If you have more than one payment, simply add them together.
Car Insurance: Enter your monthly car insurance payment here. If you pay your car insurance premium every 6 months (or yearly) instead of monthly, divide that payment by 6 to get the monthly amount. Enter that number in the budget calculator on this line.
Gas/Fuel: With the fluctuation of gas prices this year alone, your monthly gas budget can be hard to figure out. Think about the last time you filled your tank — how much did you pay? How many times do you visit the pump every four weeks? Multiply the two numbers together and enter that amount on this line.
Remember, if you’re creating a joint or family budget and you pay for gas for more than one vehicle, add the amounts for each vehicle together to get the total for the monthly budget calculator.
Car Repairs: Even if your car is under warranty, most car owners still need to pay for routine maintenance like oil changes, brake pads, and new tires. This is another place where the amount can vary wildly from one month to the next.
Just like home repairs, you can choose from these 3 popular approaches:
- Do the best you can to estimate your actual monthly cost
- Choose an amount to set aside every month toward a maintenance “fund”
- Use your “emergency fund” to cover maintenance and repairs
If you decide to go with your emergency fund for this, leave the box for Car Repairs blank.
Educational Expenses
School Supplies: This line can be used for anything from college books to pads and pencils for your elementary-school kids. If this doesn’t apply to you at all, simply leave it blank.
College Tuition: If you pay tuition fees by the quarter or semester, add up your total annual tuition and fees and divide by 12 to get a monthly amount. Just remember to set the funds aside each month until that bill comes due.
Student Loans: If you’re carrying student loans, use this line to enter the total amount you pay on those loans every month. You can also use this line to budget extra money toward those loans if you want to pay them down faster.
Deciding between paying down loans and building your savings can be tough. If you’re not sure which way to go, check out the FAQ below: Is it more important to pay off debt or build my savings?
Food and Personal Expenses
Groceries/Household: These 2 items are grouped together to cover groceries and home supplies. This will usually include food, personal care and grooming items, and household supplies like cleaners and paper towels. Estimate your monthly grocery and supply expenses and enter that number in this section.
If you’re not sure how much to include, try to determine just how much you’ve spent at the grocery the past three months — this can be a rough estimate. Again, it’s better to budget more conservatively if you’re not sure of the exact number. Then, enter that figure into the calculator.
Consider whether or not the last 3 months were higher or lower than usual — if so, you can average your bills over the last 12 months instead.
Entertainment: Are you a regular concert-goer? Do you spend a lot of time with your nose in books from the New York Times Bestseller List? Is the local IMAX theater graced by your presence on a weekly basis? Whether you're getting your fix of culture at the opera or dining on omakase at your local Japanese restaurant, these are all entertainment expenses.
Take a moment to consider all your regular expenditures in this category. That includes everything from nights out on the town to evenings in with Netflix and Amazon Prime Video. Estimate the total amount and enter it here.
Pet Supplies: Whether you have a golden retriever or an emerald tree boa, you’re spending money each month to take care of your pet. Remember to add a little extra to this monthly amount to save up for things like annual shots, a fancy new terrarium, or kennel fees when you go on vacation. Add that to whatever you pay for monthly supplies, like dog food or cat litter, and enter it here.
Clothing: Don’t forget to factor in a clothing budget every month — this is especially helpful if you’re hunting down the rarest Jordan IV’s, collecting niche Italian outerwear from Stone Island, or budgeting for clothes for your growing kids.
Even if you have two or three pairs of the most perfect broken-in jeans and don’t buy new clothes very often, you should still enter at least a modest amount to cover the occasional splurge — we all do it. If you have clothes that you dry clean regularly, like suits or winter coats, remember to include that expense here as well.
Medical: This includes the monthly cost of health insurance plus your out-of-pocket expenses for checkups, dental bills, payments on previous medical bills, and any other medical needs.
If you’re having trouble estimating this one, think about all your doctor and dentist visits, urgent care visits, and prescription costs in an average year and divide by 12 to get a monthly estimate.
However, if the cost of your medical insurance comes out of your paycheck before you take that paycheck home, you don’t need to enter the costs again.
Other Expenses: So, what about expenses that don’t fall under any of these categories? What kinds of things should you think about for your “other” expenses? Let’s take a look at a few examples:
- Holiday spending
- Vacations
- Birthday presents
- Babysitting and child care
- Computers and other electronic devices (that aren’t school-related)
- Recreational vehicles
- Gardening
This is a highly personal category. It’s designed to capture anything that isn’t already covered in your budget, so it will be unique to you.
Take a few minutes to think about anything that isn’t already covered by the monthly budget calculator. Estimate an amount for those expenses and enter it here.
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Step 3: How to determine and enter monthly savings
Emergency Fund: This is where you add your monthly contribution to your emergency fund. If you decide to include things like home or car maintenance here, remember to include enough to cover those.
Retirement: If you make separate contributions every month to a retirement fund out of your take-home pay, like a 401(k) or an IRA, enter them here. However, if your retirement contributions come out of your paycheck before you take that check home, there’s no need to re-enter that.
Investments: Use this line for any other kinds of savings you might need. If you make contributions to an individual investment account, for example, you can enter those here.
You can also use this line to contribute to any special fund you’re investing in, like saving up for a wedding, for a car, or for a down payment on a new home.
Step 4: How to incorporate your budget into your daily life
Once you’ve taken the time to think through your expenses, your daily life should fit into the confines of your budget fairly well. It’s paramount to watch your budget and track your spending for a few months to see where you might be consistently over or under your budget, and tweak as needed.
After your budget fits your needs, stick with it by finding small ways to reward yourself for your achievements. Buy yourself your favorite coffee (we like an Ethiopian pour-over) every time you contribute to your savings. Reward yourself with your favorite tacos when you stick to your budget every few weeks. These little things can mean a lot when it comes to building a habit and staying disciplined.
Finally, if you want to keep closer tabs on your spending and make it easier to track, consider using a personal finance app to help you stay on top of your budget.
Budgeting FAQs
Why is a budget important?
All this budgeting info might have you asking, well, why? It’s a fair question.
By planning ahead for large (and even unexpected) expenses in life, you’ll have the money you need no matter what comes up — without resorting to expensive credit cards and personal loans.
As a result, you’ll pay a lot less when those things happen, avoid falling into a hole financially, and you’ll have a lot more peace of mind in your day-to-day life.
Budgets can also help you pay down debt and build your savings — if you build those into your plan. By making a long-term plan for your finances, you’ll have what you need for the things you want to do today and the confidence of knowing that you have a solid plan for the future.
What’s the best way to stick to my budget?
The most important thing you can do to stick to your budget is to make sure it’s realistic. If you’re just starting out on your personal finance journey and your one-year goal is to amass a net worth of 1.3 billion USD, you might want to realign and re-evaluate that objective.
How? By including all of your expenses, saving for the unexpected, and making sure the amounts in your budget really meet your needs. And also by including doing what you love!
People often think budgeting is about miserly hoarding every single dime, but guess what? It really isn’t.
It’s more about long-term planning. A good budget sets aside some money for savings and paying down debt, includes enough to cover your bills, and still gives you some spending money left over.
If you keep running into unexpected bills, add more to your savings every month to cover them. If you’re spending more than you intended on entertainment, try to budget more for that.
Your budget is unique to you. Restructure it until it’s working for what you really need.
What is the 50-30-20 budget rule?
The 50-30-20 budget is a simple way to start budgeting without using so many categories. Instead of creating a budget based on categories like transportation costs and groceries, this budget uses just 2 categories: needs and wants.
The rule suggests using 20% of your pay on paying off debt or building your savings. Then, keep your needs to about 50% of your pay, giving you the last 30% to spend on the things you want (but don’t need).
It’s not a bad way to get started, but it isn’t very structured.
In saving for retirement, saving for emergencies, saving for maintenance funds, making sure you have enough for annual vacations, and paying down long-term debt, things can get complicated. A budget with specific categories can help you create a plan with more financial control.
Specific categories also help you see where your money is going, making it easier to adjust your spending when your life changes or when you want to start planning for something new.
Some other popular budgeting methods include:
- 10/20 Rule
- Envelope Budgeting Method
- Zero-based budgeting
Is it more important to pay off debt or build my savings?
No financial rule is a one-size fits all solution — the answer to this question is specific to you. To get you started, here are a few guidelines that can help.
- As a general rule, pay off expensive debt as quickly as you can — debt with a high interest rate. Credit card debt often falls into this category.
- If you’re saving for bills you know are coming, such as property taxes or college tuition, those are clearly important and need to be prioritized.
- If your employer has a retirement matching plan, try to contribute enough to your retirement each month to claim the full amount they’re offering.
- Once those things are included in your budget, it’s a good idea to start building some short-term savings in an emergency fund.
What is an emergency fund?
Life has a funny habit of not considering or following our plans to a T. Your emergency fund is the money you’ve saved up to handle life’s unexpected challenges.
Although you can use it for anything you need, it’s called an emergency fund because it can cover your monthly expenses if you end up between jobs for a time or if you need to take a medical leave that goes beyond your job’s allowance.
Remember, your emergency fund should be separate from your retirement fund, and the latter usually comes with penalties if you need to withdraw funds from it early. You should be able to access the money in your emergency fund quickly and easily.
What's a good target for my savings?
This is a common question with a ton of different answers — it differs for everyone. A good rule of thumb for your emergency fund is to save up enough to cover your expenses for 3–6 months. This might sound ambitious, but it’s a good goal to build into your plan.
How can I save more money?
Ready to get ahead and stash away some extra cash? The very first step in spending less money is to pay off your high-interest debt — it’s hard to get ahead when you’re shelling out your hard-earned income to creditors. Once that debt is paid off, you can use the money you used to spend on monthly payments to build your savings.
But a budget is also a great way to save even more money. Once you take control of your spending and track it categorically, you’ll know exactly where it’s going. You'll also start to see places where you can cut back — the pieces slowly fall together.
So what can this look like? In practice, you might find subscriptions you aren’t using anymore. Or you might decide you’d rather cook a bit more often instead of ordering takeout. However it plays out, you’ll have a clearer picture of your spending habits.
Remember, budgeting isn’t about depriving yourself of the things you love. It’s about making sure you’re spending your money where you really want to spend it, so you can do more both today and tomorrow. Remind yourself it’s progress, not perfection — do your best to create and stick to your budget, and you’ll find yourself in a better picture financially.
Take control of your budget with Quicken Deluxe
Get an automatic, fully customizable budget
Buy Quicken
