4 min read

How to make a monthly budget, step by step

Wondering how to make a budget? A monthly budget means deciding what you'll do with your money before the month starts, instead of finding out at the end. Five steps and a bit of quiet time are enough the first time; after that, a few minutes a week. Here they are, with an example in dollars.

Write down your income
List your fixed expenses
Estimate variable ones
Set aside your savings
Review and adjust

The five steps to make a monthly budget: income, fixed expenses, variable expenses, savings and a weekly review.

Step 1: write down your take-home pay

Start from what actually comes in: your paycheck after taxes and deductions, plus any other regular income. If your income changes from month to month, use a lean month as your base. In this example, your take-home pay is $3,000.

Step 2: list your fixed expenses

These repeat every month with a similar amount. Write them down along with their due dates, for example:

Rent: $1,100
Utilities and internet: $250
Installment on a purchase: $150
Transportation: $180

In the example, your fixed expenses add up to $1,680.

Step 3: estimate your variable expenses

Groceries, eating out, pharmacy, gifts: these change every month. If you don't know how much you spend, don't guess: write everything down for a month and use that number. For example, groceries $600, eating out $240 and other expenses $120, for a total of $960.

Step 4: decide on your savings before you spend

With $3,000 of income, $1,680 in fixed expenses and $960 in variable ones, you have $360 left. Decide right away what it's for, for example $240 for your emergency fund and $120 for a goal, such as a vacation.

If the result comes out negative, that's not a failure: it's information. Look first at your variable expenses, which are the easiest to adjust, and then at the fixed ones you could renegotiate or change.

Step 5: review every week and adjust

A budget isn't a contract. Once a week, check how you're doing in your biggest categories and, at the end of the month, compare what you planned with what really happened. What you learn there makes next month's budget better.

A few minutes a week is enough.
Fit the amounts to your life, not your life to the amounts.
Notice what went well, too.

How to do it with KaiOro

For steps 2 and 3, you need to know where your money goes. In KaiOro you log an expense in about 10 seconds: tap the category on “Home”, type the amount and tap ✓. The donut in “Categories” shows you how much goes to each one.

In “Accounts”, you add your fixed expenses once under “Recurring” (on Free, 3 active) and installments like the one in the example under “Financing” (on Free, 5). With the mode on “Remind” and “Due-date reminders” turned on in Settings (the circle at the top left on Home) → “Notifications”, KaiOro reminds you the day before. It never records anything by itself: from the due date on, tap “Mark as paid”. For step 4, the “Budgets” card on Home lets you set a monthly limit for a category, and under “Savings goals” you create your goals; on Free you have 3 budgets and 3 goals, and each budget counts only its own category, not its subcategories.

For step 5, open “Reports” and tap “Guided diagnosis”: in “Where it went” you see how much each category took. Short on time? In the guided diagnosis, choose “Clarity 20s”: four steps and you know how your month is going.

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Frequently asked questions

What if my income is different every month?

Build the budget on a cautious base income, for example the one from your leanest month. When something extra comes in, decide right away what it's for: savings, debt or a goal.

Do I have to write down every last expense?

At first it helps a lot, because small expenses add up without you noticing. Over time you can focus on your biggest categories.

How much time does keeping a budget take?

The first time, a bit of quiet time to gather your numbers. After that, a few minutes a week are enough to review and add anything that's missing.

General information to help you organize your money; not personal financial advice.