Creating Your First Budget

Your budget is the heart of Balance - it’s where you plan your spending, track your money, and work together with your partner to reach your financial goals. This guide will walk you through creating your first budget from scratch.

What is a Budget in Balance?

A budget in Balance consists of two main parts:

1. Income Categories - Money coming in (salary, side hustles, etc.)
2. Expense Categories - Money going out (groceries, rent, entertainment, etc.)

The goal is simple: allocate all your income across your expense categories, ensuring you have a plan for every dollar you earn.

Setting Up Income Categories

Your income categories represent all the money you and your partner bring in each month.

Step 1: Navigate to Manage Budget

1. Open Balance and go to the Budget tab
2. Tap Manage at the top right
3. You’ll see the budget management page with an allocation summary at the top

Step 2: Add Your First Income Category

1. Tap Add Category at the bottom
2. Toggle Income at the top
3. Enter a category name (e.g., “Salary”)
4. Enter your monthly income amount
5. Tap Save

Common Income Categories

Here are typical income categories to consider:

• Salary - Your regular paycheck
• Partner’s Salary - Your partner’s paycheck
• Business Income - Self-employment earnings
• Side Hustle - Freelance or gig work
• Investment Income - Dividends, interest, capital gains
• Other Income - Any other regular income sources

Example for Couples:

Income Categories:
- Your Salary: $4,500
- Partner's Salary: $3,800
- Side Business: $500
---
Total Income: $8,800/month

Calculating Monthly Income

If you’re not paid monthly, here’s how to calculate your monthly amount:

Weekly: Multiply by 4.33
Example: $500/week × 4.33 = $2,165/month

Bi-Weekly (every 2 weeks): Multiply by 2.17
Example: $2,000 every 2 weeks × 2.17 = $4,340/month

Semi-Monthly (twice per month): Multiply by 2
Example: $2,000 twice per month × 2 = $4,000/month

Annual: Divide by 12
Example: $60,000/year ÷ 12 = $5,000/month

Setting Up Expense Categories

Now that you’ve entered your income, it’s time to create categories for your spending.

Step 3: Add Essential Expenses First

Start with your fixed, essential expenses:

1. Tap Add Category
2. Keep Expense selected
3. Enter category name (e.g., “Rent”)
4. Enter monthly amount
5. Tap Save
6. Repeat for all essential expenses

Essential Expense Categories

These are typically your largest, most important expenses:

Housing:

• Rent/Mortgage
• Property Tax (if separate)
• HOA Fees

Utilities:

• Electric & Gas
• Water
• Internet
• Phone

Transportation:

• Car Payment
• Car Insurance
• Gas/Fuel
• Public Transit

Insurance:

• Health Insurance
• Life Insurance
• Renters/Homeowners Insurance

Debt:

• Student Loans
• Credit Card Payments
• Personal Loans

Step 4: Add Variable Expenses

Next, add categories for variable spending:

Food:

• Groceries
• Dining Out
• Coffee Shops

Personal:

• Clothing
• Personal Care
• Gym Membership

Entertainment:

• Streaming Services
• Hobbies
• Date Nights

Savings:

• Emergency Fund
• Vacation Fund
• Home Down Payment

Balancing Income vs Expenses

As you create categories, watch the Allocation Summary at the top of the Manage Budget page.

Understanding the Allocation Display

[Screenshot: Allocation summary showing percentage and amounts]

You’ll see:

• Percentage Allocated: What portion of your income is allocated
• Current vs Total: $7,500/$8,000 (expenses allocated vs total income)
• Progress Bar: Visual representation (turns red if over budget)
• Left to Allocate: Dollar amount remaining

Your Goal: 100% Allocated

Ideally, you want to reach 100% allocation:

• Under 100% (Green): You have money left to allocate
• 100% (Blue): Perfect! Every dollar has a purpose
• Over 100% (Red): You’re budgeting more than you earn

What If You’re Over Budget?

If your expenses exceed your income (over 100%):

1. Review each expense category
2. Look for areas to reduce:
   • Can you eat out less?
   • Any subscriptions you can cancel?
   • Can you reduce variable expenses?
3. Adjust category amounts down until balanced
4. Consider ways to increase income

What If You Have Money Left Over?

If you’re under 100%:

1. Add a Savings category for the remaining amount
2. Or distribute it across existing categories
3. Consider categories for future goals:
   • Emergency fund
   • Vacation savings
   • Home down payment
   • Retirement contributions

Reordering Your Categories

You can customize the order categories appear in your budget:

1. On the Manage Budget page, tap Reorder
2. Press and drag categories up or down
3. Arrange them however makes sense to you
4. Tap Done when finished
5. Tap Save Changes

Tip: Many people organize by importance (rent first, entertainment last) or by type (all bills together, all fun together).

Saving Your Budget

Once you’ve created all your categories:

1. Review your allocation percentage
2. Make any final adjustments
3. Tap Save Changes at the bottom
4. Your budget is now active!

Your First Month

What Happens Next

After saving your budget:

1. Transactions sync from your connected accounts
2. You categorize them to match your budget
3. Budget updates in real-time showing spent vs budgeted
4. You track progress throughout the month

First Month Tips

Week 1:

• Categorize all existing transactions for current month
• Check that your budget amounts feel realistic
• Show your partner how the budget works

Week 2:

• Continue categorizing new transactions daily
• Monitor categories that are filling up quickly
• Discuss any needed adjustments with partner

Week 3:

• Review progress against budget
• Identify any problem categories
• Make minor adjustments if needed

Week 4:

• See how close you came to budget
• Note categories that need adjustment for next month
• Plan next month’s budget

Example Budget for Couples

Here’s a realistic example for a couple earning $8,000/month:

Income ($8,000)

• Your Salary: $4,500
• Partner’s Salary: $3,500

Fixed Expenses ($4,850)

• Rent: $2,000
• Car Payment: $450
• Car Insurance: $150
• Health Insurance: $300
• Electric/Gas: $150
• Internet: $80
• Phones: $120
• Student Loans: $600
• Streaming Services: $50

Variable Expenses ($2,400)

• Groceries: $800
• Gas: $200
• Dining Out: $300
• Entertainment: $200
• Clothing: $150
• Personal Care: $100
• Gym: $90
• Pet Care: $100
• Misc: $460

Savings ($750)

• Emergency Fund: $500
• Vacation Fund: $250

Total: $8,000 (100% allocated)

Common Mistakes to Avoid

1. Forgetting Annual Expenses

Don’t forget costs that come up once or twice a year:

• Car registration
• Amazon Prime
• Holiday shopping

Solution: Divide annual cost by 12 and budget monthly.
Example: $120/year car registration = $10/month

2. Being Too Detailed

Starting with 50 categories is overwhelming.

Solution: Start with 10-15 broad categories. You can add more later.

3. Being Too Restrictive

Budgeting $0 for fun leads to burnout.

Solution: Include categories for entertainment, dining out, and personal spending.

4. Setting Unrealistic Amounts

Budgeting $200 for groceries when you historically spend $800 sets you up for failure.

Solution: Look at 2-3 months of past spending to set realistic amounts.

5. Not Planning for Irregular Income

If income varies month to month:

Solution: Budget based on your lowest typical month, not your highest.

Adjusting Your Budget

Your first budget won’t be perfect, and that’s okay!

When to Adjust

• During the month: Only if absolutely necessary
• End of month: Review what worked and what didn’t
• Next month: Start fresh with updated amounts

How to Adjust

1. Go to Budget > Manage
2. Tap on any category
3. Change the amount
4. Tap Save Changes

The new amount applies immediately to the current month.

Working Together as a Couple

Budget Creation

• Sit down together to create your first budget
• Both provide input on category amounts
• Discuss priorities and financial goals
• Agree on the plan before finalizing

Ongoing Management

• Weekly check-ins: 10 minutes to review progress
• Monthly planning: 30 minutes to plan next month
• Both categorize transactions as they happen
• Both monitor spending against budget

Handling Disagreements

When you disagree on budget amounts:

1. Share your reasoning
2. Look at actual spending data
3. Try one approach for a month
4. Adjust based on results
5. Compromise where possible

Troubleshooting

“I don’t know where to start”

Start with just income and your top 5 biggest expenses. Add more categories as you go.

“My income varies every month”

Use your lowest typical monthly income as your budget baseline. When you earn more, allocate extra to savings.

“We overspend every category”

Your first month is about learning. Use actual spending to set realistic budgets for month two.

“My partner and I can’t agree”

Start with non-negotiable expenses (rent, utilities) first. Focus on variable expenses separately.

Next Steps

Now that you’ve created your first budget:

1. Add Budget Categories - Learn to add and customize categories
2. Setting Category Budgets - Deep dive on budget amounts
3. Managing Your Budget - Master the budget management tools
4. Budget Progress Tracking - Monitor your progress

Congratulations on creating your first budget! You’re taking control of your finances together. 🎉

Need help? Contact our support team - we’re here to assist!