How to create a monthly budget
CalcuMetro editorial team · Published · 1 min read
A monthly budget shows at a glance how much comes in, how much goes out and how much you can save. You don't need a complex spreadsheet: four steps and a few minutes a month are enough.
Step 1: work out your net income
Start from what you actually receive each month, after taxes and contributions. If your income varies, use a prudent average of recent months rather than your best month.
Step 2: list your expenses by category
Group your expenses into a few categories so the budget is easy to maintain:
- Housing: rent or mortgage.
- Utilities: power, water, gas, internet and phone.
- Food.
- Transport.
- Health and insurance.
- Debt payments.
- Leisure.
- Other expenses.
Divide expenses you pay once a year, such as some insurance policies or taxes, by 12 to spread them across the months.
Step 3: calculate your balance and savings rate
Balance = income − expenses · Savings rate = balance / income × 100
For example, with €2,000 of income and €1,600 of expenses you have €400 left each month: a 20% savings rate.
Step 4: review and adjust every month
If the balance is negative, start with variable expenses such as leisure or shopping, which are easier to adjust than fixed ones. As a rough guide, the 50/30/20 rule suggests putting around 50% of income towards needs, 30% towards wants and 20% towards savings; adapt it to your situation.
Reviewing your budget once a month helps you catch overspending early and set realistic savings goals.
Educational content with illustrative examples; not financial, tax or legal advice.