A budget consists of a monetary strategy to tackle your expenses and plan for your goals. With a budget in place, you can plan how you will pay for your fixed expenses, monitor how much you spend on variable costs such as food and transportation, save for the future, and prepare for unexpected costs that could arise.

Budgets are dictated by your income and fixed expenses. Payments such as rent or mortgage, loans and car leases, utilities, and credit card bills are all accounted for in a monthly budget.

These are often the same from month to month, making it a fixed amount. Other variable costs, like food, clothes, and transportation are what make your budget vulnerable to disruptions.

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Since these are not steady costs, it's crucial to manage these categories of spending as much as possible.

The concept of a budget is that of allocating portions of your income to cover your expenses. This includes a percentage that is "paid" to your savings, much like a regular bill, which enables you to create a habit of saving money.

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Sometimes it isn't possible to save the same amount every month, but you should estimate a range that you wish to save on average. If you determine a range of 20 to 30 percent of your paycheck is to be saved, you can save 20 percent on the months when you have more expenses, and 30 percent on those when your budget is on target.

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To calculate your budget, take your average monthly income and subtract all of your fixed expenses. From the remainder, calculate a small budget for your variable costs and pocket money. You can do this by determining a percentage of the remainder to be used for each category, or you can calculate a fixed amount - whatever works best in your case.

Remember to set aside a percentage for your savings when calculating a budget for your variable expenses. Check your finances regularly to tweak and optimize your budget as you go.

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