How Do You Start a Budget?

To create a budget, set financial goals, and decide where to cut expenses in order to meet those goals by tracking daily spending. Budgeting requires monthly attention in order to stay on track.

Begin budgeting by setting financial goals and determining the net income for the household. Financial goals can include long-term goals, such as saving for retirement, and short-term goals, such as creating an emergency fund or paying off credit card debt. After determining the financial goals for the household, examine the household's necessary expenses and spending habits.

Track spending for at least one month by writing down all monies spent, and then review the amounts spent to decide which expenses can be reduced or eliminated. Categorize expenses as savings, needs or wants. Savings includes monies set aside for college or retirement funds, while needs are expenses that are necessary to the well-being of the household, such as food costs. Wants include all other expenses, such as clothing and entertainment costs.

Deduct fixed expenses, such as mortgage payments and utility costs, from the household's net income to determine how much is left to devote to savings accounts and wants. Aim to save at least 10 percent of the net income of the household, and review the monies spent on wants each month. The budget can be personalized by reducing the amount spent on specific wants in order to fund savings for other items. For example, families may reduce the amount spent on takeout food by cooking at home in order to save money for a vacation.