What is Budgeting?

If you’re new to budgeting, it’s important to understand what a budget is and how it helps you examine what you earn and how you are spending that income. A budget is a financial plan that takes income and expenses into account and provides estimates for how much you make and spend over a given period of time.

Things to Know

Ready to get started? Understanding the following key components will help you as you begin to build a monthly or annual budget:

• Fixed expenses are expenses that stay the same from month to month, such as rent payments.
• Flexible expenses are expenses that change from month to month, such as how much you spend on utilities.
• Total expenses are the combined amount of your fixed and flexible expenses.
• Total monthly income is the income from your job or other resources including investment dividends, pensions, Social Security benefits, rental income and more.
• Disposable income is the money you have left over after you subtract your income taxes from your income.