Once you have a list of your expenses and your income, you will need to compare the two numbers. Your expenses should less than or equal to your income. If you have additional money after you plan your budget, you can add it to the categories for your financial goals like getting out of debt or building an emergency fund. If you have more expenses than income, you will need to find ways to cut back on your expenses. Start by cutting money from your categories in the luxury section of your budget. You can also work on ways to increase the amount you earn.
A personal or household budget is an itemized list of expected income and expenses that helps you to plan for how your money will be spent or saved as well as track your actual spending habits. Though the word budget has taken on a more negative connotation over the years invoking an image of pinching pennies or limited spending, a budget is really just a tool_and a great tool at that_to gain better and more accurate insight into your spending habits.