Create a Monthly Budget Checklist to Move You Toward Your Goals

Monthly budgets can be a good way to track spending and set savings goals. Learn how to set up a monthly budget checklist. budget: how to track expenses and income for goal planning
5 min read
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Key Takeaways

  • Use a monthly budget to track your income and expenses 
  • Set realistic goals and be sure to make room for fun

  • Monitor your budget periodically to compare budgeted items to actual income and expenses  

Did you make a New Year’s resolution to create a monthly budget? If budgeting fell by the wayside along with going to the gym more often and eating better, that’s OK. We can at least help you get back on track with your budgeting resolutions.

Creating a monthly household budget can go a long way toward helping you figure out where all your money goes and you save for your goals. Having a written plan is key, according to Tom Casey, director of guidance product development and management at TD Ameritrade. It can be a simple monthly budget—just jotting down numbers on a piece of physical paper—or you can go digital with a spreadsheet or software.

Set It, but Don’t Forget It

To help you get started, here’s a step-by-step guide on how to make a monthly budget. Before you get going, gather up your documents—bank statements, pay stubs, credit card statements, and anything else that pertains to your income and expenses.

Next, do a little soul-searching and goal-planning to help you determine what’s important and what isn’t. What are your long-term and short-term goals? Examples might include saving for retirement, building an emergency fund, or saving for expenses like a child’s college, a kitchen remodel, or a destination vacation.

Now you’re ready to tackle the budget in three steps.

  1. Tally up your monthly income. Include take-home pay from a job and other outside funding sources.
  2. Write down your mandatory monthly spending. That includes rent/mortgage, utilities, loan payments, insurance, groceries, and transportation. Be sure to include savings as an expense such as saving for a home down payment or contributing to an IRA. Putting your savings on autopilot can help you stay on track.
  3. Monitor your spending from month to month. Make adjustments periodically, perhaps every six months, or at least once a year. You might track your monthly budget on a spreadsheet, as in figure 1, or you might consider using a budgeting app.
Quarterly budget monitoring
FIGURE 1: TRACKING SPENDING. By tracking your spending habits over a period of time, you can find natural averages that work for your needs. For illustrative purposes only.

One thing to keep in mind as you do your month-to-month review is that some expense categories fluctuate throughout the year. For example, if you own your home, you might pay property taxes in one large chunk. You might have higher utility bills in the summer when you’re running the air conditioner nonstop. You might spend nothing on car maintenance for several months in a row, but when your car needs a repair, you need to have some money saved up.  

Don’t get discouraged if the numbers don’t balance immediately. Especially for new budgeters, getting the cash flow right takes some time, Casey said. That’s why it’s important to track your actual spending as you create a monthly budget. Look at where you spend a lot of money, or reconsider some expenses if you’re paying for an unused gym membership.

“When you track your spending, you may realize that you generally have more money available to you than you thought to save toward toward important short or longer term goals,” Casey said.

Know Your Spending Habits

Knowing your spending habits can help you create a more realistic budget to help you reach your savings goals. “That’s where a lot of people have challenges with budgeting,” Casey said. “You don’t want to set an unrealistic budget of $20 a month for necessary items like groceries, for example.”

By tracking spending habits over a period of time, you can find some natural averages that work out. Tracking expenses over time lets you determine realistic averages for necessary items like rent or utility bills and discretionary items like eating out or date nights. You want to budget for fun for life balance, but not to the point of undermining your ability to meet important goals.

“Fun absolutely should be a line item in everyone’s budget,” Casey said. “It might be smaller based on your financial situation. But if you don’t include it, you won’t stick to your budget, and you’ll end up hating it. And that doesn’t do anybody any good.” With a monthly budget, you’ll understand where all your money goes and determine where you might free up money for key goals you want to pursue, like a vacation or home down payment.

New budgeters should regularly review their monthly cash flow to understand their spending and savings habits, but for those who have a rhythm established, it could be quarterly, he suggested. Couples should review spending and saving together to stay on track with their individual and joint goals.

Budgets will change when major life changes happen, and even small events may alter them. Pay raises, windfalls, or short-term setbacks make the quarterly check-in worthwhile. At these times, you’ll want to revisit your budget and consider allocating extra money to pay down debt or retirement savings. Or you may need to cut back on certain discretionary expenses to get through a set back.

Likewise, new goals will undoubtedly pop up and you’ll want to reevaluate your budget, and potentially adjust your spending and saving to pursue them.

The biggest thing to understand about budgeting is the relationship between income and expenses, and how they factor into saving toward goals. Your budget can be your road-map to pursuing yours.  


Key Takeaways

  • Use a monthly budget to track your income and expenses 
  • Set realistic goals and be sure to make room for fun

  • Monitor your budget periodically to compare budgeted items to actual income and expenses  

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