Step 1: Start with your take-home salary
Use the amount that reaches your bank account, not the gross salary on your offer letter. In the example, take-home salary is ₹60,000 after deductions.
Step 2: List every fixed bill
Write down rent or EMI, electricity, mobile, internet, school fees and insurance. In the example, fixed costs come to ₹28,000 (rent ₹15,000, car EMI ₹9,000, utilities and mobile ₹2,500, insurance ₹1,500).
Step 3: Set limits for everyday spending
Groceries, transport, medicines and eating out are variable. In the example, the limits are groceries ₹8,000, transport ₹3,000, medicines and health ₹1,500 and other spending ₹4,500, a total of ₹17,000.
Step 4: Decide how much to save
Set aside a fixed amount for savings before the month starts. In the example, savings are ₹10,000, which leaves a buffer of ₹5,000 for surprises.
Step 5: Track as you go
Record each spend in the same tool, on the same day if possible. Check the totals each week, so a problem shows up early rather than at the end of the month.
Step 6: Review and adjust
At the end of the month, compare the plan with what happened. Change one limit for next month and keep the rest the same. Small, steady changes work better than a big overhaul.
- Start with take-home salary
- List fixed bills first
- Set limits for variable spending
- Save a fixed amount before spending
- Track weekly and review monthly
Questions people ask
How much of salary should go to needs?
A common guide is about half for needs, which matches the 50 30 20 rule in our next article.
What if my bills are higher than my salary?
Find the largest fixed cost to reduce, and list what can wait. Talk to a financial advisor for personal advice.
Can I make a budget with an app?
Yes. budgetbaba does the totals for you and keeps each month. It is free to use.