We recommend the popular 50/30/20 budget. In it, you spend roughly 50% of your after-tax dollars on necessities, no more than 30% on wants, and at least 20% on savings and debt repayment.

4 Classic Budgeting Strategies That Still Work Today

• The zero-balance or traditional budget.
• The envelope budget.
• The pay-yourself-first budget.
• The 50/30/20 or rule-of-thumb budget.

The following steps can help you create a budget.

• Step 1: Note your net income. The first step in creating a budget is to identify the amount of money you have coming in.
• Step 2: Track your spending.
• Step 3: Set your goals.
• Step 4: Make a plan.
• Step 5: Adjust your habits if necessary.
• Step 6: Keep checking in.

12 Easy Ways to Cut Your Expenses

1. Start Tracking Your Spending Habits.
2. Get on a Budget.
3. Re-Evaluate Your Subscriptions.
4. Reduce Electricity Use.
5. Lower Your Housing Expenses.
6. Consolidate Your Debt and Lower Interest Rates.
7. Reduce Your Insurance Premiums.
8. Eat at Home.

Steps to Track Your Expenses

1. Write down your monthly income.
2. Write out your monthly expenses. Start with food, shelter (your mortgage or rent plus utilities), clothing, and transportation.
3. Make sure your income minus your expenses equals zero.

Here are eight simple but effective ways to cut back on your expenses and increase savings.

1. Put any Bonuses Into Savings.
2. Make Meals at Home.
3. Make a Grocery List Before Going to the Store.
4. Set a Shopping Limit.
5. Clean out Your Closet and Sell What You Can.
6. Cancel Club Memberships or Entertainment Bills.
7. Embrace DIY Projects.

30 Ways To Cut Your Monthly Expenses

1. Write down all of your expenses.
2. Cut out the takeaway coffees.
3. Cycle or walk to work.
4. Shop in thrift stores (at least some of the time)
5. Buy the unbranded products in the supermarket.
6. Take your own lunch to work.
7. Bulk cook your meals.
8. Compare gas and electricity prices.

While some of these expenses are small, they add up over time and put unnecessary pressure on your budget:

• Credit card interest payments.
• Your cable bill.
• Unneeded insurance.
• Pricey gym memberships and exercise classes.
• Costly gifts.
• Cigarettes and e-cigarettes.
• Your pricey cellphone plan.
• Takeout and delivery meals.

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Work overtime or get another job. What can you do in addition to cutting all unnecessary expenses to make sure your expenses don’t exceed your income? Get another job to increase income.

Budgets help people keep their expenses below their income. How do flexible expenses differ from fixed expenses? Flexible expenses vary over time.

Examples of Expenses

• Cost of goods sold.
• Sales commissions expense.
• Delivery expense.
• Rent expense.
• Salaries expense.
• Advertising expense.

An expense is the cost of operations that a company incurs to generate revenue. As the popular saying goes, “it costs money to make money.” Common expenses include payments to suppliers, employee wages, factory leases, and equipment depreciation.

This list highlights some of the most common monthly expenses to factor into your budget:

1. Housing. Your housing expenses are likely your single-largest budget item.
2. Food. Your monthly food expense includes everything that you spend on eating.
3. Transportation.
4. Childcare and pet care.
5. Cell phone.
6. Health insurance.
7. Debt.
8. Savings.

Earnings increase beginning in one’s 20s, an age group that includes some new college graduates. The median salary of 20- to 24-year-olds is $640 per week, which translates to $33,280 per year. Many Americans start out their careers in their 20s and don’t earn as much as they will once they reach their 30s.