SECTION 2 OF 8
The basics
Income is money coming in. Expenses are money going out. A budget is a simple plan for those two things—not a judgment about how you live.
Start with a month of actual spending. Include housing, food, transport, healthcare and debt payments. Set aside room for bills that arrive less often, like annual insurance. What you own minus what you owe is your net worth; it is different from the cash available to pay this month’s bills.
A simple example
Pat brings home $2,500 and spends $2,200 in a month. The $300 difference still needs to cover irregular bills and other goals before Pat decides what to save.
Useful resources
- CFPB: a simple monthly budget (opens in a new tab)
A printable example of how to organize money coming in and money going out. PDF worksheet.
- U.S. Department of Labor: preparing for retirement (opens in a new tab)
Background on retirement saving and workplace benefits.
How this connects
Once income and expenses make sense, savings and debt explain what happens to money you keep or borrow.
U.S. retirement education · Examples are illustrative. How we create these resources.
From the creator of Friendly’s Financial on YouTube. General education, with no personal financial recommendations.