How to Set Budget in AWS (Step-by-Step Guide)

Unplanned cloud costs are a common challenge for teams working in unmanaged AWS environments. Without clear budget limits in place, spending can increase gradually and often go unnoticed until it’s too late.

To help avoid this, AWS offers a built-in cost management tool called AWS Budgets. It allows you to set custom budget thresholds and automatically sends alerts when your usage exceeds those limits. In this guide, you’ll learn how to create a budget in AWS and use it to keep your cloud spending under control.

What is AWS Budgets?

AWS Budgets is a cost management tool that helps you plan and monitor your cloud spending. It allows you to set custom budget limits based on either your actual usage or forecasted costs.

Once a budget is in place, AWS Budgets tracks your resource usage in real time and sends alerts when your spending approaches or exceeds the thresholds you’ve defined. This way, you can stay informed and avoid unexpected charges.

By setting clear financial boundaries, it gives you the flexibility to act early, before your cloud costs get out of hand.

Steps to Set Budget in AWS

Step 1: Navigate to AWS Budgets

• Log in to the AWS Management Console
• From the top navigation bar, go to Billing Dashboard.
• Under Cost Management, select Budgets

Step 2: Create a Budget

• Click on Create budget
• Choose a budget type:
  
  • Cost budget: Monitors actual or forecasted spend
  • Usage budget: Tracks service usage like hours or data transfer
  • Reservation budget: Focuses on Reserved Instances usage
• Click Next to continue.

Step 3: Define Budget Scope and Details

• Set your budget name.
• Choose how often it resets (monthly, quarterly, or annually).
• Enter your budget amount.
• Choose the scope:
  • Linked accounts
  • Services
  • Regions
  • Tags (to monitor by team or project)

Step 4: Set Alert Thresholds

• Add one or more threshold percentages (for example, 50%, 80%, 100%).
• Choose how you want to receive notifications:
  • Email
  • Amazon SNS (for integration with automation tools)

Step 5: Review and Create

• Review your settings.
• Click Create budget to finish setup.
• AWS Budgets will now start monitoring costs based on your defined parameters.

Best Practices for Managing AWS Budgets

Even with budgets in place, overspending can still happen if they’re not managed well. Here are a few best practices to help you get the most out of AWS Budgets:

1. Set Multiple Threshold Alerts

Don’t rely on a single 100% alert. Instead, set thresholds at different levels, like 50%, 75%, and 90%, so you have time to react before hitting your limit.

2. Use Tags for Granular Control

Tag (Amazon S3 metadata) resources by environment, team, or department to track costs more effectively. Budgeting by tag provides deeper insight and accountability.

3. Enable Forecasted Budgets

Take advantage of AWS Budgets’ forecasting feature to get early warnings when your future usage trends toward exceeding your budget.

4. Automate with SNS and Lambda

You can connect budget alerts to automation tools. For example, use Amazon SNS with AWS Lambda to trigger scripts that shut down non-essential resources or notify teams instantly.

Want to streamline Lambda deployments?
Explore the AWS Lambda Deployment Guide.

5. Regularly Review and Adjust

As your cloud usage evolves, so should your budget. Set a routine, like quarterly reviews, to reassess budget limits and align them with actual usage patterns.

Common Mistakes to Avoid

Even with the right tools, budgeting in AWS can go wrong if not handled carefully. Here are some common mistakes to watch out for:

• Not Setting Up Alerts: Creating a budget without alerts means you won’t know when you’re close to overspending. Always set up notifications at key thresholds.
• Using One Budget for Everything: Avoid lumping all resources into one budget. Instead, create multiple budgets by account, team, or project.
• Ignoring Forecast Warnings: Forecast alerts can prevent overspending before it happens, don’t overlook them.
• No Clear Ownership: Define clear roles for who receives alerts and who takes action when budgets are breached.

Conclusion

Managing cloud costs in AWS doesn’t have to be overwhelming. With AWS Budgets, you can define spending limits, track usage in real time, and get notified before costs exceed expectations. It gives you the control you need to stay within budget, but setting it up correctly and aligning it with your evolving cloud workloads can be tricky.

That’s why having the right support matters. Managed AWS Services bring the expertise to fine-tune budgets, adapt them as needs change, and ensure your cost strategies work hand in hand with performance and scalability goals.