Skip to main content

Within Reach home


4 simple steps to creating a budget

College • September 17, 2019 • Paul Chun


A step-by-step process on how to create your own personalized budget.

What you’ll learn

  • Why you should create a budget
  • How to calculate the amount of money you’re saving
  • What your financial goals are


When it comes to achieving financial security and stability, a budget is one of the greatest tools you can have – it puts you in control of your finances and helps you save money for major goals. The trick is to figure out a way to track your finances that works for you. The following steps can help you create a budget.

  1. Calculate your earnings

    The first step in creating a budget is to identify the amount of money you have coming in monthly. Look at your salary and determine your net income. Your net income is how much money you make after any deductions like interest and taxes. This is the number you should use when creating a budget.

  2. Track your expenses

    Create a spreadsheet with a list of everything you spent money on and how much each item costs throughout the last month. This includes necessary fixed payments such as rent and bills, plus any other variable expenses like your gym membership or streaming services. Subtract your monthly expenses from the sum of your monthly income.

    Your variable expenses may change from month to month such as groceries and gas. This is an area where you might find opportunities to cut back. It’s helpful to keep track and categorize your spending so you know where you can make adjustments. Doing so will help you identify what you are spending the most money on and where it might be easiest to cut back.

  3. Set financial goals

    Before you start sifting through the information you’ve tracked, make a list of all the financial goals you want to accomplish in the short and long-term. Short-term goals should take no longer than a year to achieve. Long term goals, such as saving for retirement, may take years to reach. Remember, your goals don’t have to be set in stone, but identifying your priorities before you start planning a budget will help.

    If you want to reach your goals more quickly, there are ways to cut costs. Make a nice home-cooked dinner instead of eating out. Look for discounts when you’re shopping at the grocery store. These changes may seem insignificant, but you might be surprised how much they can help you save in the long run.

  4. Review your progress

    Check in to see how well you did at the end of each month. If you went over budget, it’s time to make some changes. But if you spent less, congratulations! Be sure to come back to your budget at the end of each month and make adjustments, like if you’ve paid off debt, increased your earnings, or accomplished a goal.

After a few months of sticking to your monthly budget you will become an expert at managing your own money.


Paul Chun is a copywriting intern at Sallie Mae. When he’s not writing content, he’s taking photos or exploring the city of Boston.


Within Reach home

This article provides general credit card information, which may or may not apply to you and your credit card. Examples provided are for illustrative purposes only.

Sallie Mae does not provide financial, tax, or legal advice and the information contained in this article does not constitute tax, legal, or financial advice. Sallie Mae does not make any claims, promises, or guarantees about the accuracy, completeness, or adequacy of the information contained in this article. Readers should consult their own attorneys or other tax advisors regarding any financial strategies mentioned in this article. These materials are for informational purposes only and do not necessarily reflect the views or endorsement of Sallie Mae.