In this section, we will learn how to create a budget, to help manage running expenses. Budgets allow the user to get notified when costs or usage exceed a certain predefined amount. So let's have look how to set up automatic notifications and actions with AWS Budgets.

So we get there by clicking here on the top menu on the billing dashboard. Here on the left, we have budgets, we click on it, and we can see that there is already a budget predefined here. I set this up in the past to get notified if my monthly budget threshold gets over $150 but let's create a new budget.

So we can select four different kinds of budgets in this case or like in general. We have cost budgets based on actual costs, usage budgets based on usage like ours and budgets for reserved instances and savings plans. So let's start with the cost budget.

So first we need to give it a name and we have to select a period in that we want to be notified. We will keep it here on a monthly period and we can also choose if this is a recurring budget or an expiring budget. Does that goes, for example, like just till April but we will stay with a recurrent budget.

So you can either choose if you want to set a fixed budget. Like for example, last month I had costs of $31. I can set this to $35 'cause this is quite close. And if I would like reach this threshold here I would get notified. You can also set a monthly budget planning.

For example, let's say you have a snowboard rental and you know, there won't be much users on your platform in the warmer month, like for example, in April till October. So you could set the budget here to like just 100 bucks. But you know, in the cooler months when there's actually actually snow, you will have much, much more users. So you could set a budget here to 1000 bucks but let's keep it simple and go with a fixed budget.

You have fear like also many other photos that you also know from the cost explorer demo. The last demo that I just showed you to get more information about the costs you had in the previous months. But let's configure the thresholds.

You can define your budget thresholds and you can set it either to the actual costs like the cost that like actually occurred to a percentage, like an alert threshold for example, like 80%. So in this case, you would get an alert if 80% of the budget that we just defined in the last step, if we reach this threshold. That will be $28 in this case. And you could also set it based on forecast at cost but this is getting too complex.

Let's keep it with the actual cost. So here, can you set up the notifications. I can like type in here, my email address and whenever I would reach the threshold I would get an email an alarm that I reached this threshold. And since October 2020, it is also possible to set different kinds of triggers for actions like budget actions. These are based either on identity and access management policies, service control policies or you can also target running instances like EC2 or RDS.

For example, you can choose to apply a custom denied EC2, run instance IAM policy to a user, to a group or to a role in your account once your monthly budget for EC2 has been exceeded. With the same budget threshold, you can configure a second action that targets specific EC2 instances, using a particular region. You can choose to execute actions automatically or make use of a workflow approval process before AWS Budgets execute a request on your behalf.

It's possible to set up five budget thresholds with up to 10 actions for each threshold. IAM and SEP action type reset at the beginning of each budgeted period. Like in our case, monthly while actions target at a specific EC2 or RDS running instances will not reset.

So we've clicked here on the budget actions we activated it, and now we can choose an IAM role that allows budget actions to actually do something with the instances that we are going to define here. So let's just take this open access role that have defined earlier and we can also choose what should happen.

We can say here if our threshold reaches the budget that we just defined, just stop all EC2 or RDS instances. This is of course, like quite radical step but if you are on a budget, well, you have to do what you have to do, right? So when you can choose if you want to stop EC2 or RDS instances, and you can also select a specific region where this should happen. And if I would click here on "Confirm budget," the budget would be set. And if the threshold is reached, I would get an email and my EC2 instances would be stepped.