How to Budget Your Money in 2025

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Evaluate Your Current Spending Habits

To set realistic goals, it’s important to have a clear and honest picture of where you stand right now. Start by taking a look at your usual spending habits. Open your banking mobile app and review a month’s worth of expenses, tallying up what you spend in a typical week and month.

If you don’t have a mobile banking app, you can track your expenses the old-fashioned way – for one month, keep track of everything your household spends money on, from major items like your mortgage or rent, your car payment, gas and groceries to smaller items like your streaming subscriptions, coffee purchases and other treats. If it helps, you can use this simple budget worksheet from the U.S. Federal Trade Commission.

Look Ahead to Your Major Upcoming Expenses

Think ahead to the coming year: What big expenses do you anticipate? Certain costs, like taxes and insurance, may only hit once or twice a year. Take those figures and divide them up to their per-month cost. For instance, if your car insurance payment is $600 every six months, that’s $100 per month. You might also include seasonal costs like back-to-school spending, and be sure to include debts like school loans or credit cards.

Add Up Your Income and Compare

Finally, add up all of your sources of income, including paychecks, assistance programs, child support and anything else. Once you’ve done that, compare your total monthly expenses with your monthly income. How much do you have left over at the end of the month?

Set Your Financial Intentions

Where do you hope to be in a year, financially? Consider your priorities – are you hoping to aggressively pay down your credit card debt? Are you saving up for a big family vacation? Or do you simply want to see more money in your savings account?

Next, it’s time to get specific. Look at your monthly spending and evaluate what costs can be trimmed. Phrase your goals in measurable terms, like “I want to limit my spending on takeout food to no more than $300 a month” or “I want to put $500 into a savings account each month.”

Take Aim at Your Expenses

Certain costs, like your mortgage and your car payment, are inflexible and should be your top priority to pay each month. You might want to explore a refinance to see if you can save on your mortgage, but other spending categories might be easier to slim down.

Areas that you might be able to trim include:

• Groceries – Opt for store brands instead of name brands, and look for recipes that favor cheaper ingredients.
• Utilities – Reduce your electric bill by adjusting your thermostat, and cut down on your water bill by shortening your showers or consolidating loads of laundry.
• Media Subscriptions – This can include streaming, gaming and publications. Do you have subscriptions you’ve completely forgotten about that you can cancel?
• Clothes and Accessories – Look through your closet and see if there are items you’ve forgotten about. If you need new items, opt to shop clearance racks or thrift stores.
• Going Out – If you spend regularly on rideshares, entry fees at clubs and cocktails at bars, you could save by cutting down on these outings, even if just by one or two weekends per month.
• Takeout Food – Ordering food might feel convenient, but it often costs more than cooking for yourself. Set a goal to always prep lunch, or to limit yourself to one or two takeout meals per week.
• Miscellaneous Extras – Do you often treat yourself to a $6 coffee on your way to work, or buy $3 chips every day at the office vending machine? Try to forgo these small indulgences.
• Gas – Depending on where you live, you could opt to use public transit for certain regular commutes, or carpool more often.

Focus On Your Priorities

If you’re currently despairing at the little treats and joys you’ll have to give up, that’s understandable – but remember you don’t have to go cold turkey on these small pleasures. Rather, give yourself a set budget for these items, and strive not to exceed that amount each month.

It takes some self-control, but remember what you’re doing it for – giving up some of the short-term buzz of a new clothing purchase or takeout meal is getting you closer to your goals and the satisfaction of seeing more money in your bank account.

Plus, small expenses add up! For example, say you’re spending around $10 to $15 every weekday on lunch. Over the course of a month, that’s somewhere between $200 and $300. If you instead prepare your lunches ahead of time, your lunches can be reduced to $2 to $5 per meal – resulting in a potential monthly savings of at least $100 to more than $200 – and a potential annual savings of at least $1,000, if not $2,500 or more.

The above scenario accounts for one person – savings could be even greater for a family that commits to making more meals at home. When you think about the potential cash savings, the extra time spent cooking may seem worth it.

Don’t Forget to Budget for Emergencies

Before you lock in your budget, be sure to set aside some funds for unexpected costs. Don’t let your best-laid plans get knocked off track by car repairs or a broken A/C. For example, if you put aside $130 each month in “just in case” money, you’ll have an emergency fund of more than $1,000 in 8 months. For more information on how much to save for emergencies, check out this Nerdwallet® Emergency Fund Calculator.

Make Saving Easy with Automation

Setting up automatic deposits into a savings account takes the hassle out of saving money. If you’re paid at regular intervals, such as mid-month and at the end of the month, you can schedule recurring transfers from your checking account into your savings account around payday. This way, you’re automatically setting money aside before you even start spending.

If you’re living paycheck-to-paycheck with very little wiggle room, budgeting should make it easier for you to find expenses you can reduce so you can save that money instead. Even if you can only save $65 from each paycheck, by the end of the year you’ll have $1,560 you wouldn’t have saved otherwise.

Keep Track of Your Budget

There are many handy budgeting mobile apps and online tools you can use to track your spending and saving. You can get alerts if you go over budget, and easily see where things went wrong if you get off track. Don’t get discouraged – just jump right back into your budget plan.

Some budgeting tools also allow you to share budgeting info with a partner, so you can track spending together in real time.

You may want to revisit your budget every few months to examine if it’s working well for you or if you can make adjustments. Maybe you need to allocate more for gas than you thought, or maybe you’ve found you’re consistently under budget and are able to move more money into savings each month.

Remember, it takes several weeks to form a habit, but eventually your budgeting habits will become easier, and then become second nature. It’s an admirable goal to become more responsible with money, and we at Newrez wish you well on your journey to greater financial freedom.

Need A Loan?

As one of the country’s largest mortgage lenders, we work with folks every day who are trying to meet money goals like buying a new home or funding a major home renovation. Look over your budget – do you think you’re ready to take the next step toward your financial future? If you need help, make use of our mortgage calculators.

Our loan specialists would be glad to run you through the numbers to see what you can afford and which loans you might qualify for. Reach out to one of our mortgage experts and we’ll be glad to go over your options.

Nerdwallet® is a registered trademark of Nerdwallet, Inc. and is not affiliated with Newrez LLC.