A budget is simply a plan for how you will spend and save your money each month. The goal is to give every dollar of income a job before the month begins.

1. Add up your monthly income

Start with the money you actually take home after taxes. If your income changes from month to month, see How do I budget with a changing income?.

2. List your expenses by category

Write down everything you spend money on and group it into categories such as housing, food, transportation, and debt payments. Include both fixed bills (rent, insurance) and variable spending (groceries, entertainment).

3. Give every dollar a job

Assign your income to your categories until the amount left to assign is zero. This includes assigning money to savings and to paying down debt — those are spending decisions too.

4. Review and adjust

Your first budget is an estimate. After a month of tracking, compare what you planned against what you actually spent and adjust the numbers so the budget reflects your real life.

In Wallet1000 you can build your budget by category and the platform keeps your spending and income in balance for you as you make changes.