It breaks down your budget categories into three broad segments:
<ul>
<li>50%: Essential Expenses like housing, automobile expenses, groceries, insurance, utilities, etc.</li>
<li>30%: Discretionary Expenses (Non-essential) like Dining out, entertainment, drinks, etc.</li>
<li>20%: Financial Goals including mortgage, home, and educational savings.</li>
</ul>
If there is heavy credit-card debt, the financial goals should be 30% and non-essential spendings only 20%.

The 50/30/20 Rule

The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.
This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.

The Envelope System

The principles that make a good budget, something you can stick to:
<ul>
<li>Being Realistic: Being too strict is a recipe for failure.</li>
<li>Making Adjustments: A budget is not set in stone, but a fluid thing.</li>
<li>A Team Sport: If you live with a partner or spouse, you have to agree mutually on how to budget the financials.</li>
<li>Expect the Unexpected: Keep an emergency fund, ideally 3-6 months of necessary expenses.</li>
<li>Budgeting the Expected: Certain upcoming expenses need to be budgeted in advance, like property tax, holiday shopping, etc.</li>
</ul>

How to Create a Good Budget

No matter how little or how much money you earn, creating a monthly budget is one of the most important aspects of managing your finances. What gets measured gets managed. 
Having a budget doesn't stop you from spending money the way you want it to, but works like a partner to track your spending and allocating resources to help you reach your financial goals.

A Monthly Budget For Your Money

Follow these simple steps and start Budgeting:
<ul>
<li>Choose the right tool (Budgeting App, Excel sheet or Envelopes)</li>
<li>Gather all information like your bank and investment account numbers, user id's, and passwords.</li>
<li>Make a list of all your income sources and all your expenses.</li>
<li>Share the important financial and budgeting details with your partner or spouse if applicable.</li>
</ul>

Start Budgeting

Creating a monthly budget is one of the most important aspects of personal finance. A monthly budget can show where you're overspending, where you need to make adjustments, and how far along you are toward reaching your financial goals. We'll show you how to budget painlessly!

Start Budgeting

Similar ideas to Start Budgeting

Make a Budget in 6 Simple Steps

How to create a budget

WES MOSS