Step 1: Note your net income. The first step in creating a budget is to identify the amount of money you have coming in. Keep in mind, however, that it's easy to overestimate what you can afford if you think of your total salary as what you have to spend. Remember to subtract your deductions for Social Security, taxes, 401(k) and flexible spending account allocations when creating a budget worksheet. Your final take_home pay is called net income, and that is the number you should use when creating a budget.Tip: If you have a hobby or a talent, you may be able to find a way to supplement your income. Having an extra source of income can also be helpful if you ever lose your job.
Budgeting and Personal Finance. Budgeting is the primary way that you can take control of your finances. Simply put, a budget is a written plan for how you will spend your money. You can create a monthly or an annual budget. The budget allows you to make financial decisions ahead of time, which makes it easier to cover all your expenses throughout the year. Budgeting consistently can help you turn your finances around and begin to build wealth.