Creating AWS Budgets: Savings Plans and Cost Budgets

14 October 2021

Managing AWS infrastructure while keeping budgets under control is a challenge many businesses face. Cloud usage is inherently dynamic, requiring continuous adjustments to tools and forecasting processes. This complexity often leads to concerns about staying within budget while scaling efficiently.

However, taking control of cloud spending is entirely possible with the right tools. AWS offers features like Auto-adjusting Budgets, which allow businesses to set realistic financial goals, track key performance indicators, and make smarter, cost-effective decisions based on actionable insights.

At Webby Cloud, we specialize in helping businesses navigate these challenges. In this post, we’ll explore how AWS Budgets can transform your approach to managing IT costs and guide you through the process of setting them up. Let us help you simplify your cloud cost management and unlock the full potential of your infrastructure!

Benefits of AWS Budgets

AWS Budgets is an essential financial management tool that helps businesses control and optimize their AWS costs. Key benefits include:

Customizable Budgets: Set tailored budgets with alerts for costs or usage exceeding your limits, preventing unexpected charges.
Diverse Budget Types: Create budgets by service, tags, or specific resource groups, aligning with your unique operational needs.
Proactive Alerts: Receive notifications when your budget thresholds are breached, enabling immediate action to avoid overspending.
Detailed Cost Insights: Access comprehensive reports on AWS cost and usage, helping you identify savings opportunities.

With AWS Budgets, managing and forecasting your AWS expenses becomes streamlined, helping you avoid overspending and maximize the value of your resources.

What are AWS Budgets?

AWS Budgets is a versatile tool designed to help you plan, manage, and predict your AWS expenses. Offering annual, quarterly, monthly, or even daily budgets, it ensures timely interventions to avoid unnecessary costs or usage surpluses.

With the introduction of Auto-adjusting Budgets in February 2022, budgeting has become even more dynamic. This feature adjusts your budget based on historical costs or usage patterns, simplifying the process and minimizing manual input.

For example, if your average monthly AWS spend over the last six months is $200, the tool will recommend a $200 budget for the upcoming period. Any significant change in your spending patterns triggers a notification, ensuring you remain in control.

How to Start With AWS Budgets

Start small and manageable when setting up your first AWS Budgets:

Focus on a Single Service or Component: Begin with one AWS service (e.g., EC2), part of your app (e.g., front-end resources), or a specific environment (e.g., production).
Define Metrics: Decide whether to measure cost, usage, or both. If you’re using Reserved Instances or Savings Plans, AWS Budgets can help ensure optimal resource utilization.
Enhance Visibility: Integrate AWS Budgets with AWS Cost Explorer for better cost analysis. Additionally, connect it with services like AWS Chatbot for real-time budget alerts in platforms like Slack.

Creating a Budget Using AWS Budgets

Now that we’ve covered the basics of AWS Budgets and why they’re valuable, let’s dive into the step-by-step process of creating a budget tailored to your needs. Whether you’re tracking costs, managing usage, or optimizing resources, setting up AWS Budgets will help you stay in control and make informed decisions. Let’s get started!

By Savings Plans Budget

Step 1: Log In and Access AWS Budgets

Start by logging into the AWS Management Console.
Navigate to the AWS Cost Management Console and choose “Budgets” from the navigation pane.

Step 2: Start Budget Creation

Click the “Create budget” button at the top of the page.
Select “Savings Plans budget” under the “Budget Type” section and hit “Next”

Step 3: Define Budget Period

Under “Utilization Threshold”, select the time period for the budget reset:
- Options include Annual, Quarterly, Monthly, or Daily.
- Keep in mind that all times are in UTC format

Step 4: Choose Monitoring Criteria

Under “Monitor My Spend Against”, select:
- Utilization of Savings Plans: This tracks how much of your Savings Plans are being utilized.
- Coverage of Savings Plans: This monitors how much of your instance usage is covered by Savings Plans.

Step 5: Set the Utilization Threshold

In the Utilization Threshold field, enter your desired utilization percentage. For instance, if you want to stay above 85% utilization, input 85%
AWS will notify you whenever your utilization drops below this threshold, ensuring you stay informed and proactive

By Create a Cost Budget

Step 1: Access the AWS Management Console

Log in to your AWS Management Console.
Navigate to the AWS Cost Management console.

Step 2: Create a New Budget

Click on Create budget at the top of the page.

Choose Cost budget under the budget type options and click Next to proceed.

Step 3: Set Budget Details

Budget Amount: Enter your desired budget limit (e.g., $500).
Period: Daily / Monthly / Quarterly / Annually
All budget times are in UTC format.

Step 4: Configure Alerts

Set up notifications to alert you when your actual or forecasted costs exceed the budgeted amount.
Specify the threshold percentages (e.g., 80%, 100%) at which you’d like to receive alerts.
Enter the email addresses or SNS topics to receive these notifications.

Step 5: Review and Create