Photo of a person inserting their debit card into an ATM machine.

Budgeting can be daunting, especially if it’s your first time managing your own finances. Regardless of your income, budgeting is a great tool for everyone to use. In fact, it can help you save money, keep up with bills, work towards your goals and plan for the unexpected.

Here are a few simple steps you can take to create an effective budget.

1. Calculate your income

Whether you work part-time, full-time or receive a living stipend from your family or academic program, a good budget starts with calculating your income.

Here are some important definitions to know:

  • Gross income: This includes everything you make before taxes and other deductions are taken into account.
  • Net pay: This is the amount of money that actually makes it into your bank account (sometimes referred to as ‘take home pay’).

For budgeting purposes, it’s most important to focus on your net income, because it can give you a better sense of how much money you actually have at your disposal. If you’re paid weekly or bi-weekly, add up your net income to get a monthly total. This is the number you will want to use when planning your budget for each month.

Important note: If you receive tips or commission, your net income will likely vary from month to month. If this is the case, calculate your income based on the worst-case scenario by looking at what your lowest paycheck has been over the past six months. Similarly, if you’re living off of savings, it can be helpful to look at what you have in total and determine how much you have to spend each month to ensure your current and future expenses can be covered.

Now that you know your net income for each month, you can move forward to the next step!

2. Is it fixed or variable?

Expenses fall into one of two categories: fixed or variable. 

  • Fixed expenses are expenses that stay the same month to month. These expenses typically include things like your rent, internet and phone bills.
  • Variable expenses are expenses that vary from month to month. These can include things like groceries, eating out, utilities, personal care, social events and other one-off purchases. Unlike fixed expenses, variable expenses tend to depend on our choices and decisions rather than obligations.

Make a list of all your fixed and variable expenses. This will help you get a better idea of how you can adjust your habits and spending to fit within your budget. Here are some examples of what this might look like.

 Fixed expenses

  • Rent or mortgage payments
  • Car or loan payments
  • Phone bill
  • Insurance
  • Internet
  • Childcare

​ Variable expenses

  • Dining out and groceries
  • Entertainment
  • Gas
  • Parking
  • Clothing
  • Personal care
  • Healthcare
  • Hobbies and recreation

Now that you know your fixed and variable expenses, you can start tracking your spending.

3. Track your spending

Now that you understand the categories of expenses, you can start to track your spending. It’s usually most helpful to look at the past three months to get a sense of how much you typically spend.

You can track your spending in a couple of different ways.

Bank statements

Print off three months worth of bank statements that show all of your spending transactions. Comb through your transactions for each month and categorize them. For instance, you may highlight all of your grocery expenses in pink while you mark all of your dining out expenses in green. This will help you visually sort your transactions to give you a better idea of your spending habits. For instance, you may notice that you have a lot of pink items (i.e. groceries). Or you may notice that you eat out more often than you grocery shop. For each category, add up the total you’ve spent each month to give you an idea of how much of your income goes towards different things.

Online tools

If manually printing, sorting and adding up expenses doesn’t sound like something you want to do, you can also use online tools to help. Mint is a great option for those who would rather take their budgeting digital. This free app allows you to connect your bank accounts into one central hub, so you can see all of your expenses at once. From there, you can categorize each expense into different categories, like groceries, entertainment, dining out, subscriptions, etc. Once you’ve categorized all of your transactions, Mint will provide you with a simple chart to show you where your money is going each month. For instance, you may notice that you spend 30% of your income on dining out but only 5% on groceries. Additionally, Mint allows you to see how your spending has changed over time, which can be helpful when preparing for seasonal changes (e.g. utility costs may increase during colder months).

Pie chart showing spending based on categories like shopping, auto, food and dining, etc.           Bar chart showing spending over time from January to December of 2021.

Once you’ve categorized your expenses, it’s time to evaluate your habits and non-negotiables.

4. Figure out your non-negotiables

While it may seem obvious, it’s helpful to determine what your non-negotiables are in terms of budgeting. For instance, paying for rent, utilities, phone service, groceries and healthcare are common non-negotiables for people. However, non-negotiables can also include things like a weekly coffee or other self-care activities that can impact your life in smaller ways.

Make a list of your non-negotiables and keep these in mind when looking at where you can cut back.

5. Cut back where you can

Now that you have a good idea of where your money goes and what your non-negotiables are, it’s time to figure out what may not fit into your overall budget. Take another look at your transactions and ask yourself: Are there any expenses that I’d like to cut back on or eliminate altogether?

For instance, you may realize that you don’t need four streaming subscriptions or you would prefer to save some money by packing your lunch. Make a list of these items.

Now that you have your list, go through and try to set a budget for each item. For instance, if you currently spend $75 per week eating out, it may be helpful to commit to cutting back to $40 per week. Be sure to keep in mind that your budget still has to fit your life. If you really want to eat out twice each week, try to come up with a number that will allow you to do that while being mindful of how much money you spend each month.

Hint: Mint can be great for these types of budget changes, as it allows you to set a specific budget for each category. For instance, you can set a budget of $40 per week for eating out. The app will automatically alert you when you are getting close to that budget or go over. It can also offer personal spending insights. For instance, it may inform you that you spent more money this month than you did last month on a specific category in your budget.

Now that you've identified spending habits you can change, it's time to set some financial goals.

6. Set financial goals

Reviewing your spending and creating a budget to save money is great, but what’s the point? Having a budget in place will help you set and achieve your financial goals. For instance, you may want to pay off student loans, buy a car, travel, buy a house or plan for retirement. 

These types of financial goals can help inform your budget and allow you to determine how much money you can afford to put towards them.

One financial goal that everyone should have is building an emergency fund. Emergency funds are savings accounts that allow you to prepare for emergencies or unexpected expenses. These can include things like layoffs, car accidents, medical bills and other expenses that you can’t always plan out in advance. Emergency funds should account for three to six months of expenses. Luckily, you have a pretty good idea of how much money you need each month, so you can easily figure out how much you’ll need to create an emergency fund.

Once you know what you need for your emergency fund (or other goals), create a savings plan that fits into your current budget. For instance, you may dedicate $10 or $50 each month to your savings account. Or you may ask to have a certain percentage of your paycheck sent to another account so you never see it, but you know it’s there.

Take some time to think through your goals, estimate how much money you need to achieve them and create your own savings plan based on your current income and expenses.

Now that you've identified some financial goals or milestones you'd like to reach, it's time to put your plan into action.

7. Review your budget regularly

You’ve officially created your first budget! Pat yourself on the back for a job well done, but also keep in mind that personal circumstances can change. Be mindful about reviewing your budget each month or quarter, especially if you get a new job, move, plan a family or experience other significant changes that could affect your income or expenses. Regular reviews of your budget will help you make adjustments as needed so you can continue to stay on track.


MoneyCoach is a free site that allows you to watch personal finance videos and quiz yourself on topics like banking, credit cards, debt, loans, taxes, investments, insurance and more. 

Available for: Students, staff and faculty

Elevations Credit Union

CU Boulder has an Elevations Credit Union office in the UMC. They offer online support resources and virtual events to help you manage your money better.

Available for: Students, staff and faculty

Financial assistance funds

Whether you’re looking for support with campus programs, academics or other areas, there are student resources available. Check out available assistance funds, scholarships and other financial programs on campus.

Available for: Students

Basic Needs Center

The Basic Needs Center provides support for students facing food insecurity, housing emergencies and more. They can connect you with on-campus resources as well as local, regional and national support services.

TIAA consultations

You don’t have to be a financial expert to prepare for retirement. As a CU Boulder employee you’re entitled to free one-on-one consultations with TIAA financial professionals. They can help you clarify your goals, understand where you stand financially and work toward your financial goals.

Available for: Staff and faculty

Down payment assistance

CU Boulder works with Landed to provide down payment assistance to employees. Landed’s program can help you reach a 20% down payment as long as the employee contributes at least 5%.

Note: Other institutions, like Bank of America, also provide down payment assistance programs for first-time homebuyers.

Available for: Staff and faculty

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