How To Use a Budget to Stay on Track

Learning to budget is like eating your greens.

For many, making sure you eat enough vegetables is a chore that might even be repulsive to some. But you have to find the veggies you like to eat—maybe add some spices—and make them a part of your daily routine. Similarly, you should find the budget that you like the best and make it a part of your day-to-day life.

And just as eating your vegetables is good for your physical health, learning to create a budget is good for your financial health. Not only does a budget give you visibility into your spending habits, it can help you find savings and let you invest more.

No matter if you receive a regular paycheck or earn money from freelancing or waiting tables, you can create a budget using whatever method works best for you. Some options include the envelope method, the zero-sum budget, or the 50-30-20 budget.

This sample budget below uses the 50-30-20 method, in which you break down your expenses into three categories: 50% for “needs”, 30% for “wants”, and 20% for savings. You can adjust the percentages to fit your own life and priorities. 

Here’s how it works:

*Note: The numbers used in these screenshots are for illustration purposes only.

First, figure out your monthly income. 

Calculate your budget with your monthly paychecks (after taxes), any miscellaneous cash, and rollover cash from last month. Here’s an example: 

Split your monthly income into categories

Try using the 50-30-20 budget to split your monthly income into “needs” or Fixed (Essential) Expenses (50%), “wants” or Variable (Flexible) Expenses (30%), and Saving and Investing (20%). You can use the equations below to figure out your amounts.

Note, people may define fixed and variable expenses a bit differently, but this is meant as a general template to get you started.

Categorize your expenses

This sample budget includes $3,000 of monthly income from two paychecks, and spare cash from the previous month. You can use this model to make your own budget, with your own numbers.

Create a budget that works for you

Like diets, no two budgets are the same. Everyone has different priorities and preferences when it comes to spending, investing, and even viewing financial information. The budget you create doesn’t have to look like this one, but you do need one if you want to keep your financial life in order.

If you’re looking for a place to get started, you can download this sample 50-30-20 budget, which includes a blank sheet for you to fill out, below:

Download Stash's sample budget