diff --git a/backend/app.py b/backend/app.py
index 892d585..3cd3294 100644
--- a/backend/app.py
+++ b/backend/app.py
@@ -4,12 +4,15 @@
 from flask_cors import CORS
 from backend.database import db, migrate
 
+
 def create_app(config_class):
-    app = Flask(__name__, 
-                template_folder='../frontend/templates',
-                static_folder='../frontend/static')
+    app = Flask(
+        __name__,
+        template_folder="../frontend/templates",
+        static_folder="../frontend/static",
+    )
     app.config.from_object(config_class)
-    
+
     # Initialize extensions
     db.init_app(app)
     migrate.init_app(app, db)
@@ -17,23 +20,25 @@ def create_app(config_class):
     CORS(app)
 
     # Landing page route
-    @app.route('/')
+    @app.route("/")
     def index():
-        return render_template('index.html')
+        return render_template("index.html")
 
     # Health check endpoint
-    @app.route('/api')
+    @app.route("/api")
     def api_status():
-        return jsonify({'message': 'API is working', 'status': 'success'}), 200
-    
+        return jsonify({"message": "API is working", "status": "success"}), 200
+
     # Register blueprints
     from backend.routes.auth import auth_bp
+    from backend.routes.budget_routes import budget_bp
 
+    app.register_blueprint(budget_bp, url_prefix="/api/budgets")
 
-    app.register_blueprint(auth_bp, url_prefix='/api/auth')
+    app.register_blueprint(auth_bp, url_prefix="/api/auth")
 
     # Create tables
     with app.app_context():
         db.create_all()
-    
+
     return app
diff --git a/backend/models/__init__.py b/backend/models/__init__.py
new file mode 100644
index 0000000..f78dd25
--- /dev/null
+++ b/backend/models/__init__.py
@@ -0,0 +1,3 @@
+from .budget import Budget
+from .transaction import Transaction
+from .category import Category
diff --git a/backend/models/budget.py b/backend/models/budget.py
new file mode 100644
index 0000000..c24edaf
--- /dev/null
+++ b/backend/models/budget.py
@@ -0,0 +1,15 @@
+from backend.database import db
+from datetime import datetime
+
+class Budget(db.Model):
+    __tablename__ = 'budgets'
+    
+    id = db.Column(db.Integer, primary_key=True)
+    category_id = db.Column(db.Integer, db.ForeignKey('categories.id'), nullable=False)
+    user_id = db.Column(db.Integer, db.ForeignKey('users.id'), nullable=False)
+    amount = db.Column(db.Float, nullable=False)
+    period = db.Column(db.String(20), nullable=False)  # e.g., 'monthly', 'weekly'
+    created_at = db.Column(db.DateTime, default=datetime.utcnow)
+
+    category = db.relationship('Category', backref='budgets')
+    user = db.relationship('User', backref='budgets')
diff --git a/backend/routes/budget_routes.py b/backend/routes/budget_routes.py
new file mode 100644
index 0000000..a89d705
--- /dev/null
+++ b/backend/routes/budget_routes.py
@@ -0,0 +1,106 @@
+from flask import Blueprint, request, jsonify
+from flask_jwt_extended import jwt_required, get_jwt_identity
+from sqlalchemy import func
+from backend.database import db
+from backend.models.budget import Budget
+from backend.models.transaction import Transaction
+from backend.services.budget_service import calculate_spending
+
+
+budget_bp = Blueprint("budget_bp", __name__)
+
+
+@budget_bp.route("/ping", methods=["GET"])
+def ping():
+    return {"message": "Budget service is up"}, 200
+
+
+@budget_bp.route("/api/budgets", methods=["POST"])
+@jwt_required()
+def create_budget():
+    user_id = get_jwt_identity()
+    data = request.json
+
+    # Validate input...
+    budget = Budget(
+        category_id=data["category_id"],
+        user_id=user_id,
+        amount=data["amount"],
+        period=data["period"],
+    )
+    db.session.add(budget)
+    db.session.commit()
+    return jsonify({"message": "Budget created", "budget": budget.id}), 201
+
+
+@budget_bp.route("/api/budgets", methods=["GET"])
+@jwt_required()
+def list_budgets():
+    user_id = get_jwt_identity()
+    budgets = Budget.query.filter_by(user_id=user_id).all()
+    return jsonify(
+        [
+            {
+                "id": b.id,
+                "category_id": b.category_id,
+                "amount": b.amount,
+                "period": b.period,
+            }
+            for b in budgets
+        ]
+    )
+
+
+@budget_bp.route("/api/budgets/<int:budget_id>", methods=["PUT"])
+@jwt_required()
+def update_budget(budget_id):
+    user_id = get_jwt_identity()
+    budget = Budget.query.filter_by(id=budget_id, user_id=user_id).first_or_404()
+    data = request.json
+    budget.amount = data.get("amount", budget.amount)
+    budget.period = data.get("period", budget.period)
+    db.session.commit()
+    return jsonify({"message": "Budget updated"})
+
+
+@budget_bp.route("/api/budgets/<int:budget_id>", methods=["DELETE"])
+@jwt_required()
+def delete_budget(budget_id):
+    user_id = get_jwt_identity()
+    budget = Budget.query.filter_by(id=budget_id, user_id=user_id).first_or_404()
+    db.session.delete(budget)
+    db.session.commit()
+    return jsonify({"message": "Budget deleted"})
+
+
+@budget_bp.route("/api/budgets/status", methods=["GET"])
+@jwt_required()
+def budget_status():
+    user_id = get_jwt_identity()
+    budgets = Budget.query.filter_by(user_id=user_id).all()
+    status_list = []
+
+    for b in budgets:
+        spent = calculate_spending(user_id, b.category_id, b.period)
+        status_list.append(
+            {
+                "budget_id": b.id,
+                "category_id": b.category_id,
+                "amount_budgeted": b.amount,
+                "amount_spent": spent,
+                "status": "over" if spent > b.amount else "under",
+                "difference": round(spent - b.amount, 2),
+            }
+        )
+
+    return jsonify(status_list)
+
+
+def check_alerts(user_id):
+    alerts = []
+    budgets = Budget.query.filter_by(user_id=user_id).all()
+    for b in budgets:
+        spent = calculate_spending(user_id, b.category_id, b.period)
+        if spent > b.amount:
+            alerts.append(f"You've exceeded your budget for category {b.category_id}.")
+    return alerts
diff --git a/backend/services/budget_service.py b/backend/services/budget_service.py
new file mode 100644
index 0000000..0fa289c
--- /dev/null
+++ b/backend/services/budget_service.py
@@ -0,0 +1,28 @@
+# services/budget_service.py
+from datetime import datetime, timedelta
+from sqlalchemy import func
+from backend.database import db
+from backend.models.transaction import Transaction
+
+
+def calculate_spending(user_id, category_id, period):
+    now = datetime.utcnow()
+
+    if period == "monthly":
+        start = datetime(now.year, now.month, 1)
+    elif period == "weekly":
+        start = now - timedelta(days=now.weekday())  # Monday start
+    else:
+        return 0
+
+    total = (
+        db.session.query(func.coalesce(func.sum(Transaction.amount), 0))
+        .filter(
+            Transaction.user_id == user_id,
+            Transaction.category_id == category_id,
+            Transaction.created_at >= start,
+        )
+        .scalar()
+    )
+
+    return total