How to make a monthly budget in 5 steps
A simple way to make your monthly budget: income, fixed and variable costs, savings first and tracking, with a worked example.
A budget isn’t a list of things you can’t do, it’s a plan: deciding before the month starts where each euro goes. These five steps are enough to get started.
1. What really comes in
Add up your take-home income for the month: your pay as it lands in your account, plus any other regular income. If your income changes every month, use your weakest month of the last six as the reference.
2. Your fixed costs
These repeat and cost the same, or nearly, each month:
- Rent or mortgage and building fees.
- Electricity, water, gas, internet and phone.
- Insurance, commuting, memberships and subscriptions.
- The minimum on your loans or cards.
For things paid once a year, such as insurance or property tax, divide by twelve and set that aside each month.
3. Savings, as one more fixed cost
This is the change that works best: decide how much you save before splitting the rest. The budgeting guide from Finanzas para todos (Spain’s securities regulator and central bank) recommends treating it as a fixed cost, to build an emergency fund and reach your goals. Even if it’s small, make it every month.
4. Split what’s left into categories
What remains after fixed costs and savings is your variable money. Split it into a few categories: groceries, eating out, fun, clothes, transport and other.
An example with €1,850 take-home pay:
| Item | Per month |
|---|---|
| Fixed (rent, bills, transport, insurance) | €1,050 |
| Savings | €250 |
| Groceries | €300 |
| Eating out and fun | €150 |
| Other | €100 |
5. Track it daily, not at month end
Budgets fail when you only look on the 30th. Log expenses as they happen and check what’s left in each category. If one runs over, balance it with another that month. And when the month closes, whatever’s left can go to savings or roll over.
This guide is for information only and isn’t personalised financial advice.