A budget represents your financial priorities and objectives and is more than just a list of your earnings and outlays. The first step in creating a budget is to collect all of your financial records, such as pay stubs, bills, and brummy wealthyank statements. This will provide you with a clear picture of your sources of income as well as fixed costs like utilities, insurance, and rent or mortgage payments. Divide your expenses into fixed & variable costs after you have a thorough understanding of your financial status. Whereas variable costs are subject to change, fixed costs are those that don't change every month. Expenses for groceries and entertainment, for example, are classified as variable.