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Co-authored-by: Anthony <russo555@gmail.com> Co-authored-by: Brian McClain <brianmmcclain@gmail.com>
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content/well-architected-framework/docs/docs/optimize-systems/manage-cost/create-cloud-budgets.mdx

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@@ -5,7 +5,7 @@ description: Create cloud budgets and spending alerts using Terraform for AWS, A
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# Create cloud budgets
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Cloud spending can quickly get out of control without proper oversight and controls. According to the [2023 HashiCorp State of Cloud Strategy Survey](https://www.hashicorp.com/en/blog/hashicorp-state-of-cloud-strategy-survey-2023-maturity-drives-operational-efficiency), 94% of respondents experienced avoidable cloud costs. Proactive budget creation, automated alerts, and anomaly detection gives you the visibility and control you need to maintain predictable spending and prevent cost overruns before they occur.
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Cloud spending can quickly get out of control without proper oversight and management. According to the [2023 HashiCorp State of Cloud Strategy Survey](https://www.hashicorp.com/en/blog/hashicorp-state-of-cloud-strategy-survey-2023-maturity-drives-operational-efficiency), 94% of respondents experienced avoidable cloud costs. Proactive budget creation, automated alerts, and anomaly detection give you the visibility and control you need to maintain predictable spending and prevent cost overruns before they occur.
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Implementing a budget provides you with the following benefits:
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<Note>
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The Terraform example in this document has a `tags` block. Refer to the [Tag cloud resources](/well-architected-framework/optimize-systems/lifecycle-management/tag-cloud-resources) document to learn about implementing a tagging strategy.
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The Terraform example in this document uses the `tags` block. Refer to the [Tag cloud resources](/well-architected-framework/optimize-systems/lifecycle-management/tag-cloud-resources) document to learn about implementing a tagging strategy.
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</Note>
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## Create spending limits and notifications
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Most major cloud providers offer native tools to create budgets. These tools allow you to set budget thresholds, monitor spending, and receive alerts when spending approaches or exceeds defined limits.
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Most major cloud providers offer native tools to create budgets. These native tools allow you to set budget thresholds, monitor spending, and receive alerts when spending approaches or exceeds defined limits.
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You can use Terraform to define and manage cloud budgets across your organization. You can create Terraform modules to create budgets for different teams, projects, or environments. These modules can automatically apply appropriate budget thresholds, alerting mechanisms, and spending limits to new or existing cloud resources.
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If you're tracking resources by tags, it is important to have a well-defined tagging strategy to ensure budgets are applied correctly. Terraform can help you enforce tagging policies and ensure that all resources are tagged consistently. Creating infrastructure manually can lead to incorrect or missed tags on resources, resulting in inaccurate budget tracking.
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If you're tracking resources by tags, it is important to have a well-defined tagging strategy to ensure budgets are applied correctly. Terraform can help you enforce tagging policies and ensure that all resources are tagged consistently. Creating infrastructure manually can lead to incorrect or missing tags on resources and result in inaccurate budget tracking.
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The following is an example of a Terraform configuration that creates an AWS EC2 budget. This budget tracks EC2 instance costs and sends an alert to test@example.com when the forecasted cost exceeds 100% of the budget. You can set similar budgets and alerts for other cloud providers, such as Azure and GCP.
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Some of the key components in the previous example include:
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- **limit_amount:** Defines the monthly spend limit.
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- **notification:** Defines the notification criteria and sends an email to test@example.com.
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- **tags:** The tag is applied to the budget resource, not the EC2 instance. The tags allow you to filter and organize budgets in the billing console.

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