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how to create a budget in three easy steps first letamp;#39;s define the word budget a budget is a plan for what youamp;#39;ll do with your money each month step one using pen and paper or an income and expense tracker list all your sources of income that is any money you plan to get during the month step two list all your expenses that is all the money you plan to spend during the month including any debt you can also order organize your expenses into categories like food utilities and transportation step three subtract your expenses from your income if your monthly expenses are more than your monthly income revise your spending habits and make some adjustments to your budget for a more detailed step-by-step guide on how to create a budget read our blog and download a free expense tracker