AWS Knowledge
Understanding AWS Budgets and How You Can Use It
Piyush Kalra
Jan 6, 2025
Managing cloud costs isn’t just nice to have anymore; it’s a must. If you’re using AWS and want to avoid unexpected bills, AWS Budgets is exactly what you need. AWS Budgets enables you to track AWS expenses, monitor AWS resources, and even take actions on your behalf should the spending surpass your preset limits.
This blog will walk you through:
What AWS Budgets is and how it fits into AWS Cost Management
The different types of budgets you can set up
Common challenges businesses face with cloud spending (like costs creeping up 20-30% without warning)
Practical steps to set up AWS Budgets
Advanced features and real-world applications of AWS Budgets
Whether you’re deep into FinOps or just starting out with AWS, this guide has tips you can actually use to manage your cloud spending.
What is AWS Budgets?
AWS Budgets is a powerful cost management tool that helps in controlling AWS expenses by monitoring resource cost allocation and usage in the cloud. It has a variety of uses such as setting budgetary limits, assigning usage bounds, and keeping track of spending patterns. Seamlessly integrated into AWS services, Budgets greatly enhances the speed and accuracy of cloud cost management.
Key Features and Benefits:
Monthly or quarterly costs: Monitor spending for specific projects or teams and stay within budget by controlling expenses in active workloads.
Usage patterns: Examine the use of EC2 Instances or S3 Services for particular time periods to assess whether lower or higher utilization thresholds were met and take action accordingly.
Reserved Instance utilization: Check how much reserved capacity is being utilized relative to other RIs purchased in the organization to ensure maximum value for money.
AWS Savings Plans: Monitor overall expenditures and spending before and after implementing the savings plans to determine their benefits.
Why Use AWS Budgets?
Studies show that 78% of cloud companies encounter unexpected bills due to unmonitored costs. AWS Budgets helps overcome this by:
Providing real-time cost insights so there’s no mystery about where the money goes.
Preventing budget overruns through proactive alerts and auto-adjusted budget thresholds.
Improving resource cost allocation, ensuring every department or project stays financially accountable.
Types of Budgets in AWS
1. Cost Budgets
Track your overall spending with fixed or dynamic thresholds. Cost budgets:
Monitor monthly, quarterly, or yearly costs.
Include or exclude factors like discounts, tax, and refunds.
Notify you if spending exceeds or is forecasted to exceed the set threshold.
2. Usage Budgets
Focus on specific AWS service usage, like how much EC2 or Lambda compute capacity you consume. Usage budgets:
Help in cost monitoring resources to prevent wastage.
Alert if you’re nearing free tier limits or specific usage caps.
3. RI Utilization and Coverage Budgets
Ensure your prepaid Reserved Instances are fully utilized.
Notify you if RI usage drops under a predefined percentage.
4. Savings Plans Utilization and Coverage Budgets
Track how much of your Savings Plan commitment is being used and what percentage of eligible usage is covered by it. This will save costs by promoting optimal Savings Plan usage.
Common Challenges in Cloud Spending
Before we jump into setting up AWS Budgets, it’s essential to address typical pain points:
Lack of cost visibility into departmental or project-specific costs.
Unexpected charges, often due to underused resources or overlooked fees.
Wasted resources like compute instances or storage that's provisioned but never utilized.
AWS Budgets tackles these challenges directly and allows companies to be proactive instead of reactive.
How to Set Up AWS Budgets
Setting up AWS Budgets is straightforward and customizable. Here’s a step-by-step guide:
Login into to AWS Management Console and navigate to the Budgets screen:
Click the Create Budget button at the top of the page.
There are two types of budget setups:
Simplified Template: Start with this prebuilt budget template, which you can easily adjust to fit your budget needs.
Advanced Customization: Use the advanced template to create a budget tailored to your specific requirements for more flexibility. Customize parameters such as start month, time period, and specific accounts to match your use case.
In this case, we will go with a prebuilt budget template.
There are 4 types of use cases for the pre-built template:
Zero Spend Budget: Get notified instantly when your spending exceeds AWS Free Tier limits.
Monthly Cost Budget: Monitor your costs with alerts for actual or forecasted monthly expenses that exceed your set budget.
Daily Savings Plans Coverage Budget: Keep track of your savings plan coverage and receive alerts if it drops below your target threshold.
Daily Reservation Utilization Budget: Monitor your reserved instance utilization and get alerts when it's underperforming.
In this case, we will go with the Monthly cost budget.
Now, you have to Configure alerts to notify you when:
You hit 80% of your defined threshold.
You’re forecasted to exceed budget limits.
You can send these alerts via email or Amazon Simple Notification Service for broader stakeholder distribution.
Click on Create Budget.
That's it! This is now created.
Pro Tip: You can see the costs and usage, filter it according to your use, or download the budget spending data in CSV file format.
Best Practices for Managing AWS Budgets
Review Budgets Regularly: Adjust your budget proactively as operations scale to avoid unexpected overages.
Use Cost Tags: Tag resources (e.g., “Marketing”) to quickly identify and eliminate unnecessary costs.
Automate Actions: Set rules to block new resource creation if spending exceeds 90% of your budget.
Integrate Tools: Export AWS Budgets data into tools like QuickBooks to track and optimize spending.
Educate Teams: Train developers to use auto-scaling and spot instances to reduce costs.
Advanced Features of AWS Budgets
Ready to get more out of AWS Budgets? Here are some advanced features that make managing your costs easier:
Auto Adjusting Budgets: Your budget updates itself based on how your usage changes over time; kind of like having a smart thermostat that can adjust to the varying weather.
Multi-Channel Notifications: Get alerts about your budget on the platforms you use most, such as email, Slack, or Amazon Chime. It is like receiving a text when your package is out for delivery.
Actionable Alerts: If you're nearing your AWS spending threshold, service pausing, resource adjustment, and more can be done autonomously with these budget alerts. Nobody wants to go overboard, so budget alerts like these are dramatic—ultimately giving you peace of mind!
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Conclusion
AWS Budgets surpasses the premise of a budget tracking tool; it becomes fundamental towards the realization of financial autonomy and strategic governance. Companies can achieve almost zero wastage while improving efficiencies and saving money when regularly using and aligning budgets with organizational objectives and integrating them with cloud cost management.
Don’t wait for your next AWS billing shock. Explore AWS Budgets and Pump, and see the difference for yourself. You can experience the transformation yourself by signing up for the AWS free trial. Put your cloud service expenses under cost control today.
