Income and Expenses

Tracking what and where you spend your money is the first step to managing your money.


Expenses are things that you spend money on. You will want to break them down into the following categories:

  • Fixed Expense: These are expenses that are always the same each month. For example, rent, car payments, student loans, and insurance.
  • Variable Expense: These are expenses that you will need to pay each month but can vary in the amount. For example: utilities and transportation.
  • Incidental Expense: This category includes everything else you want to spend money on. This category will be the hardest part of budgeting. This is where you have to start keeping track or even look at what you have been spending your money on. You will want to keep track on a daily basis for at least one week to get a better picture of where your money is going.

If you are not sure where to start, here are three options:


The other half of the budget equation is figuring out your monthly income. List all your sources of income, including wages, savings, and financial aid (scholarships, grants, and loans).

The Bottom Line

Compare what you're spending (Expenses) each month with the money you have (Income). If those amounts come out even, or if you have more income — even a little more — than what you're spending, you have your finances under control.

Making a budget can help you find ways to use your money more effectively, i.e. freeing up more money to save and invest. You can do this by identifying your wants.

If your spending outweighs your income, you should reduce your expenses or increase your income to bring the two into balance. Otherwise you'll find yourself in financial trouble. The first step will be for you to look at your expenses and identify your needs vs. wants.

Page last modified October 7, 2015