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Setting up a Budget to Save Money

Posted By admin On April 15, 2009 @ 9:40 am In Budgeting | Comments Disabled

Perhaps one of the most fundamental ways to take control of your money is to create a budget for yourself and your family. When you know exactly where your money is going you will be better able to make the kind of changes necessary to save money and achieve your financial goals.

Identify Your Goal

The first thing to identify when you set out to make a budget is your goal. What are you trying to achieve? Do you want to save money faster? To create a college fund? To eliminate debt? Setting a goal gives you something identifiable to work towards.

Once you have your goal in mind, calculate your monthly income after tax. This might primarily be your salary or wages, but you should also include income from any other source e.g. bonuses, interest on savings, dividends from investments, child support etc.


Next, identify your monthly expenses. Large, regular payments such as rent, mortgage, insurance and utilities bills will be easy enough to track down via receipts, bills or bank statements. Smaller, less regular expenditure might require a little more work. For one month before beginning your budget note down every single daily expense you make. These smaller expenses are often ignored or underestimated and can provide great opportunities for you to save money.

Obviously, the more your income exceeds your expenses the quicker you’ll be able to move towards your goal. While you might not be able to increase your income in the short term it’s more than likely that with careful planning you will be able to reduce your expenses.

Categorise Your Expenses

In order to easily identify areas for spend reduction break all your monthly expenses down into categories. Some headings you might use for your budget are: Food, Car, Clothing, Entertainment, Utilities, Insurance, and Housing. Then, using whatever method you prefer – spreadsheet, notebook and pen etc. – list all appropriate expenses under these headings.

Now go through your categories one by one and decide which expenses you can reduce and which expenses you can eliminate entirely. The total of the remaining expenses in each category will form your monthly spend limit for that category. Now all you have to do to start saving money is stick to these limits. Good luck!


  • Give yourself time. Budgeting requires lifestyle changes and these can take a while to come to terms with.
  • Along with all your other categories, add one to cover emergencies. Many well planned budgets fail when an unanticipated expense like a car repair comes along. Setting aside a portion of your income to cover emergencies will help avoid this threat and keep you on track to save money.

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