Balancing and Budgeting — Budget Basics

Budget Basics

Budgets get a bad rap. We tend to think of “budgeting” as limiting our choices. But having a budget does not mean you have to feel deprived. On the contrary, a budget can help you build savings, and even put you on the road to accomplishing your goals.

What’s not to love about that?

A budget helps you take control of your finances, and learn to tell the difference between wants and needs.

Having a budget can reduce stress, too. You’ll breathe easier knowing exactly how much money is coming in and being able to stay in control of where it goes.

Create your budget

Follow three steps to create your own budget:

  1. Track and Examine Your Spending—Figure out where your money goes. Try writing down every expenditure—no matter how big or small—for one week, or one month. Look carefully at what you’ve spent. Any surprises?
  2. Use a Budget Worksheet—A budget worksheet is a detailed list you fill in with all of your monthly income and expenditures. You can write your own, or use ours as a guide.
  3. Set Financial Goals—Identify and write down your financial goals. Maybe they include sending your kids to college, buying a home, or saving a certain amount by retirement age. Set short- and long-term goals.

Read 10 Tips for Spending 

Avoid budget busters – wants vs. needs

Did you know some of the biggest barriers to building wealth are “instant gratification” purchases?

Break down your budget, be realistic and categorize your spending: essentials, secondary needs, nice-to-haves…and “un-necessaries.”

Essentials: Basic needs that allow you to live your daily life, for example:

  • Groceries
  • Housing (mortgage or rent payments, maintenance)
  • Transportation
  • Health care
  • Basic clothing
  • Utilities
  • Insurance
  • Taxes

Secondary Needs:  Non-essential items that make life easier but are not extravagant expenses, for example:

  • Cell phone
  • Internet service

Nice-to-Haves: Things you like that make life enjoyable, for example:

  • Vacations and travel
  • Entertainment (dining out, cable television, movies, theater, etc.)
  • Pets
  • Gym membership
  • Non-basic clothing

Un-necessaries: The “where does the money go?” spending and impulse buying

Are Americans interested in tracking their budget online?1

Bar chart showing 50% of Americans interested in tracking their budget online, 35% not interested, and 15% not sure.

A budget helps you meet financial goals

Complete this worksheet and see how you can save for what you really want.


Download a Budget Worksheet (1.1 MB PDF)

Get Adobe Reader 

This site is for education purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.


Source: North American Technographics Financial Services Online Survey, Q2 2008, Forrester Research, Inc., Survey Base: 3,581 US Online Respondents currently using online money management tools and those not currently using them but are interested in using them.