A group of friends around a table enjoying a meal.
A group of friends around a table enjoying a meal.

Making & Spending Money

January 1, 2024

Financial responsibility starts with figuring out how much money you have coming in (your income), and how much money you have going out(your expenses). By comparing the two, you can create a budget to help protect yourself against going into debt.


Sources of Income

In most cases, income comes from a salary or wages, government benefits (such as Social Security), and investments. Income tends to be variable—often changing over time—so budgets should be regularly reviewed and adjusted to ensure they suit your income level, lifestyle, and overall financial goals at any moment.



As everyone quickly discovers, money tends to go out just as fast as it comes in. Like income, expenses also grow over time to eventually include housing, utilities, groceries, phone, internet, and transportation—and that’s just the monthly essentials! There’s also insurance, healthcare, credit card bills, clothing, and other countless expenses that will eat away at your income.

When developing a budget, it’s good to divide your expenses into two categories: the ones that stay the same every month (like housing, phone bills, car payments, etc.), and those that vary. You usually have more control over the latter since they include things like entertainment and eating out—costs you can rein in if necessary to manage your finances.

One other expense item to add to your budget—that unfortunately often gets overlooked—is funds to set aside for savings. Whether it’s a simple bank account to save for a rainy day, an investment portfolio with a specific financial goal in mind, or a retirement account for down the road, regular monthly savings should be an integral part of any budgeting plan.


The Numbers in Black and White

Getting a handle on your monthly income and expenses and creating an effective budget can be done in a few simple steps. Use the BudgetCalculator below to:

• Record your monthly income.

• List your fixed monthly expenses.

• Compile a list of your variable monthly expenses.

• Compare what’s coming in with what’s going out.

Budget Calculator >


If you don’t have enough income or spend more than you earn, your cash flow will be negative rather than positive. This can make it much harder to pay your bills, secure loans, and afford the things you want to buy.It also means you may be relying on credit cards or other forms of debt to make ends meet.

Turning a negative cash flow into a positive one is the only way to lead a secure financial life and set the stage for a success full financial future. Sometimes, you’ll face expenses that are out of your control.If an emergency arises and you have to borrow money or use a credit card to pay for it, reduce other expenses as much as possible to pay back the money you borrowed as quickly as possible.


Balancing Your Budget

The easiest way to balance your budget is to reduce your spending. Look at your variable expenses that tend to be indulgences rather than necessities. These are the expenses that should be cut first.

Another good option is to find other sources of income. From a part-time job or side hustle to selling arts and crafts online or in person, there are myriad ways to boost your income. Of course, it’s usually harder to earn extra income than to cut expenses, but it’s the perfect solution for some people.

When your cash flow becomes positive, you should consider putting aside a little each month to help cover unexpected future expenses. Not only will you be living comfortably within your means with a balanced budget, but you’ll also be confident that you’ll have the money you need, when you need it.


Figuring Out Your Net Worth

Do a quick assessment of your current net worth by clicking on the questionnaire below. Answer a few easy questions on your assets and liabilities to understand where you stand today so you’re better equipped to start creating a budget or setting financial goals.

Net Worth Questionnaire >

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