How To Create A Budget

Wondering how to actually create a budget?  I promise you, it is super simple. For some reason, when I first started budgeting and knew that meant I had to actually put together a physical budget, I was completely overwhelmed.

I remember staring at a pile of paperwork (bills, loan statements, insurance papers, receipts, on and on went my pile of papers) and thinking there was no freaking way I was ever going to be able to make sense of it all.

I felt frustrated, overwhelmed, totally out of my comfort zone and unqualified to be the leader of my own financial life.  After struggling for a bit to figure all of this out, I can tell you, none of this is as scary or complicated as we often make it out to be in our heads.

If you are ready to start budgeting, we are going to do that!  Now, I would love for you to have all of your papers super organized just to get you started off on the right foot, BUT if we are just shooting for a put-together budget, we will accomplish that today.

I live by a monthly budget.  Some people live by a bi-weekly budget.  This makes sense depending on when you get paid.  If you get paid every other week, you may want to make two budgets per month (one for each paycheck).  I get paid once a month so I budget once a month. You with me?

When should you create a budget?

The best time to create your budget is right before the month starts.  Most bills you have will be due on the 1st, 15th or 30th of the month. The beauty of planning your month before it starts is just that…you have a plan before any of your money is gone.  

Your budget is your plan for your money.  You are deciding exactly how you will spend it before the month even starts.  Then as the month goes on….phew! The pressure is off to get creative with your spending.  You had already decided where all that cash was going.

If you get paid twice a month, you can still make a plan for the whole month, you will just have to make sure you have your bills divided evenly throughout the month (call and adjust due dates if need be so you have half your bills coming out the first and half coming out the 15th after you get paid again).

What do you create a budget from?

This is where your budget categories will come into play.  There are categories of spending we all have.

• Charity
• Saving
• Housing
• Utilities
• Food
• Clothing
• Transportation
• medical/health
• Insurance
• Personal
• Recreation
• Debts

You will determine what categories you usually spend money in.  It is super helpful to look at your past 1-3 months of expenses to see where you have been spending your money on average.

For each category (use our free budget categories checklist), you will guestimate what you think you will spend in that area for the month.  For example, I know, based on my average spending, I need to budget $150/month for cosmetics and toiletries for my family.

NOT SURE WHAT YOUR CATEGORIES SHOULD BE?  USE OUR FREE BUDGET CATEGORIES CHECKLIST TO GET STARTED!  SIGN UP BELOW FOR INSTANT ACCESS!

Once you know your expenses, you are halfway there!  The next step will be to know your income. This will include any form of income you have for the entire month. 

Again, if you are budgeting by each paycheck, then you will create two budgets for the month with each paycheck as the income for each budget.  The other option is to combine what you will make for the month and make that your total income (just know you won’t have access to half of it until after the 15th).

How to create a budget.

Now it’s time to put it all together!  For this step, you need to use our Basic Budget Setup Forms.

GET THE FREE BASIC BUDGET SETUP FORMS TO PUT YOUR BUDGET TOGETHER RIGHT NOW!  DOWNLOAD THE FORMS IMMEDIATELY WHEN YOU SIGN UP BELOW!

Income:  On the first sheet labeled income, you are going to write your total income for the month (ie. all income sources for the month).

Expenses:  On the second sheet labeled expenses, you are going to write down every budget category you have and the amount of money you expect to spend in that area for the month.

Ready for this??  You are about to put your budget together!

Budget:  On the third sheet, you will just fill in the blanks.  You will write down, the category, the amount you expect to spend in that area, then you will write how much you actually spent in the category and calculate the difference.

I believe in a zero-based budget.  This means your income minus your expenses should equal zero at the end of the month.

Tracking your expenses:  All the worksheets after your budget (when you use our Basic Budget Setup Worksheets) are meant for you to record your transactions as they happen so you see where you spent your money, label it in the correct category and keep running totals throughout the month. 

This makes it super easy for the end of the month to transfer how much you spent in each category.

Guess what?  You totally just made a budget and tracked it for a whole month.  Simple as that! Congratulations! You are amazing!

Insider tip:  If budgeting is totally new to you, hang up your budget someplace you will see it every day.  This will remind you to track your expenses and keep in touch with your budget throughout the month.

See?  You can seriously whip this up in 10 minutes.  Budgeting doesn’t have to be hard. I promise! Use our free worksheets to help you get started.  Your budget will always be a work in progress, so don’t fuss over making it perfect. That will NEVER happen.  I am four years into this and still haven’t had a “perfect” budget. Life happens and that’s okay.

Don’t wait any longer.  Get your budget set up right now!

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