Auburn Savings - Beginners BudgetHaving a budget is your foundation for financial planning. It allows you to gain financial awareness by tracking your spending habits. Your budget will display how much income you’re expecting along with how much you’re spending and able to save each month.

Your budget doesn’t need to be etched in stone—actually, it shouldn’t be. You want it to be flexible to life’s surprises. If your budget is not super restrictive, you’re more apt to stick to it which is way better than not budgeting at all. The key is finding a balance between discipline and thoughtless spending.

Let’s build a budget using the popular method called the “50/30/20 rule.” The “50” represents your necessities, the “30” accounts for “wants” or extra spending, and the “20” will be for savings.


  1. Find Your Income Amount

If you have a salary, this will most likely be a fixed amount each month. If your income fluctuates, that’s okay too! Distinguish when you get paid: weekly, biweekly or any other system your employer may use. Then, take that amount and multiply by the number of paychecks you get in one month. For instance, if you are paid weekly at $500 per week, your monthly income will be $2,000.

If you don’t have a set income amount, you can make your budget by averaging your paycheck amounts from the last few months. You can also make your budget based on each paycheck. Every time you get paid, divide your paycheck into the 50/30/20 categories. Just make sure you have all of your expenses listed and nothing goes unpaid!


  1. Calculate Your Needs

Calculate how much you spend on needs each month. According to the 50/30/20 model, it should account for 50% of your monthly income. Using the example above, 50% of your income would be $1,000. Necessities are defined as expenses that need to be paid in order for you to live and work. Some examples are:

  • Mortgage/Rent
  • Utilities (heat, electricity, phone)
  • Groceries
  • Transportation costs (gas, vehicle registration, car payment)
  • Minimum loan payments (student loans, credit cards)
  • Childcare (daycare, babysitters)
  • Insurance (healthcare, vehicle, life)


  1. Calculate Your Wants

Calculate how much you can spend on wants each month. According to this model, it should account for about 30% of your monthly income. Continuing with the example above, 30% of your income would be $600. Wants are any expenses that you can technically live without but that make you happy or allow you to live more comfortably. Wants will be different for everyone but some examples include:

  • Dining out (restaurants, coffee shops)
  • Entertainment (events, concerts, streaming services)
  • Traveling
  • Technology gadgets
  • An expensive car


  1. Calculate Your Savings

Calculate how much you should save each month. With this model, it will account for 20% of your monthly income. Using the previous example, this will leave $400 to set aside for saving. This may include:

  • Emergency fund
  • Retirement accounts
  • Eliminating debt

Remember, your minimum payments on any debt—such as student debt or credit card debt—should be listed under your “needs” and paid for with your “needs” budget of 50% of your income. Any extra amount you’re able to put towards your debt can come from this 20% category.

  1. Choose Your Tracking Method

Now you need a way to keep all of this information clear, organized, and readily available. This will depend on you and your lifestyle. Some ideas include:

  • Checkbook register
  • Apps or software
  • Pen and paper
  • Shared online document

Using whichever tracking method works best for you, make sure to be diligent every month, every day, every purchase. Having your spending available and easy to read is important to keeping your budget on point.


Everyone’s incomes and lifestyles are different and will change throughout their lifetime. Some months you may see yourself needing to change the category percentages in order to adapt to your expenses. If your needs become 70% of your income, rearrange the remaining 30% amounts into both wants and savings. This is perfectly okay! As long as you stick with budgeting, you will begin to form a strong financial foundation.


Interested in learning more? Read about the importance of financial planning here).


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