It can sometimes be tricky to understand where your money is going. A lot of times the number of small purchases you make can slip your mind. These small purchases, along with bigger ones like rent, loans, or electric bills, can make your bank account seem like it’s handing out money. If you’re unsure of your expenses or lost when it comes to budgeting, try making a personal spending guideline. The steps are relatively easy and can be updated as needed. For help with this checklist, you can use a template.

Necessity Expenses

Start by compiling all the “necessity” bills. These can include expenses like a mortgage, rent, electricity, insurance groceries, etc. The items in this category are things you need to survive. It does not include cable or internet, which you’ll add to the equation when you look at your extra, “entertainment” expenses.

Entertainment Expenses

Here’s where entertainment expenses come into play. In this category, you want to focus on items like music or video subscriptions, cable, and your phone bill. We can also include bills from dinners out or drinks with friends. This category consists of the things we often treat ourselves too, but which can be cut back if necessary.


Calculate all after-tax income you receive in your household. Remember to add your spouse’s income too, as well as any forms of income you may have. These can include money you take in from side jobs, rental properties, etc.

Calculate the Difference

Subtract your necessity and entertainment expenses from your earnings. If the total is smaller than you want it to be, look towards your entertainment expenses to see what you can live without or cut back on.

Make A Landing Pad

Once you’ve figured out what you’re working with after paying your expenses and perhaps cut back on a few non-essentials, you want to figure out how much you can comfortably put aside. This is important, so try not to skimp! Saving helps ensure that you have money in case an emergency were to occur, such as losing a job or a medical emergency. This also ensures that you have money if you do happen to spend a little too much one month, like around a loved one’s birthday or a holiday.

Make An Investment

Just as important as saving, investing some money can help you meet long-term money goals. You can put aside a little each month, and the smallest amount makes a big difference in the long term. If you happen to receive a bonus, or other income one month, consider setting aside more than usual. Habits like these will help set you up for success in the future.

Whatever money you have left over after all your calculations is the amount you have to spend each month. Of course, you don’t have to spend it all. Try challenging yourself to save or invest more and more each month. You’d be surprised what you can live without once you see the benefit of a growing savings or retirement account.