How To Make A Monthly Budget

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So you’ve decided you want to get this money thing figured but you’re left wondering how to make a monthly budget and make it stick, right?

The word budget has gotten a bad rap because people often feel restricted from spending. But really, budgeting is just figuring out where your money goes and intentionally making changes until you’re happy with the results. 

Before we get into the steps to make a monthly budget, let’s clarify what budgeting is–and isn’t.

What Is A Budget?

In simple terms, a budget is a plan for your money that shows how much you have coming in and where it goes out.

I’ve used a budget to be intentional with my money for years. My husband and I have paid off sick amounts of student loans, lived off only one income at times, and cut our income by 60% so I could be a stay-at-home mom. We used budgeting to get through all of these times without adding more debt.

A saying by Dave Ramsey that sticks with me is: “If you don’t tell your money where to go, you’ll be left wondering where it went.”

So true, Mr. Ramsey, so true.

So let’s take charge of your money and make sure you’re happy with where it goes.

Step 1. Get A Budget Template

The first gift I created to give to the awesome people who read my book about blasting away debt was a budgeting template.

And by popular demand, now I’m sharing my monthly budget template with anyone who joins The Common Cents Club tribe!

I’ll give you the exact budget spreadsheet I have used for years to crush our financial goals. Just sign up for the Resource Library and start taking control of your money today!

If you’re ready to throw in the towel instead of using a spreadsheet, the only alternative I recommend for budgeting beginners is paper and pencil.

Step 2. Write Down Your Monthly Net Income

The second step to making a monthly budget is to identify how much money you earn each month, including income from full-time jobs, side hustles, and Social Security checks. Be sure to use the number you take home after taxes, Social Security, retirement contributions, etc. This amount your take-home is called your net income.

Step 3. Create Spending Categories

Next, write down the categories where you spend money. Later you’ll indicate how much you spend in each category per month.

Common budget categories include:

  • Housing (mortgage, rent, campus housing)
  • Utilities (electric, water, gas bills)
  • Homeowners or rental insurance
  • Property taxes
  • Housing maintenance and repairs
  • Gasoline
  • Food and Groceries
  • Cell phone and landline
  • Internet and TV
  • Monthly subscriptions
  • Healthcare (co-pays, prescriptions, insurance)
  • Debt (student loans, credit card bills, personal loans, and car payments)
  • Personal care (salons, products, cleaning and household supplies)
  • Clothing and shoes
  • Pet
  • Gifts
  • Savings
  • Entertainment (admission fees, tickets, vacations, fun money)

Step 4. List Your Fixed Expenses

Next to each category that has a fixed expense where the bill remains the same every month, write down the amount due. Common fixed expenses are housing, insurance, cell phone, cable, internet, and debt payments.

Step 5. List Your Variable Expenses

Next, total your other costs that vary each month. Things like food, gas, and entertainment often vary from month to month. Every dollar you spend should be accounted for in your budget. You can see how much you spend by looking at your bank statements, credit card statements, and receipts.

Step 6. Compare Net Income vs. Expenses

Add up your total monthly expenses and compare it to your net income.

If your expenses are greater than your income, then you are digging yourself a bigger pile of debt by living off borrowed money every day. The good news is you can find all the optional expenses and start cutting back immediately.

If your net income is greater than your expenses, congratulations!! You are officially weird. With your budget, you can intentionally use that extra income to pay off debt, build savings, and invest for the future.

Step 7. Adjust If Necessary

If you spend more than you earn and you want to stop creating a financial disaster, you need to make adjustments. In other words: You Need To Spend Less Money Or Earn More. (Or both!)

The beauty of a budget is once you know where all your money goes, you can easily make changes and see where you can cut back. The easiest way to do find ways to save money is to ask yourself this one question:

Does your budget match your values?

If you choose to spend $100 on tv every month, is that what’s valuable to you? Or would you rather have $1,200 this year to build an emergency fund, invest in your retirement, or finally be free from interest charges and suffocating debt? In my experience, all of these bring peace of mind. But only you can answer if your budget matches your values.

If you value being debt free but are doing nothing to get out of debt, then you need to stop sticking your head in the sand hoping it will get better on its own. It won’t. You are the only one who can choose to make your spending align with what you value and want in life.

And if you’re resistant to “giving up” spending now because budgeting seems restrictive, then you’re forgetting to focus on all that you’ll gain.

Step 8. Keep Tracking Your Expenses

Once you start budgeting, you’ll need to continue to track your expenses to stay on top of your spending. Create a routine where you regularly track how much you spend in each category.

The cool thing about using an Excel spreadsheet is the spreadsheet can do the math for you so you can quickly see the total you’ve spent in each category. This will help you stick to your budget so you don’t accidentally overspend.

Step 9. Review And Plan

At the end of each month, take a few minutes to review how you did that month. Note where you did great–and not-so-great. Adjust your plan for the upcoming month so you create a budget that you can stick to AND that helps you meet your bigger goals.

If you didn’t stick to it as well as you hoped, Don’t Give Up! Review these budgeting tips from the experts and simply try to do a little better next month. It’s bumpy at first but gets easier over time.

Make A Monthly Budget And Stick To It

If you’ve made it this far, it’s clear you’re ready for a change. You want to make better choices with your money and you can do it. Once you get through the discomfort of creating a plan for your money and tracking your spending, you’ll be a budgeting pro in no time.

After you take the time to create a monthly budget. Do your best to stick to it by exercising self-control, discipline, contentment, and focus on your values. It’s ok to ask for help when you need guidance or encouragement. And don’t be afraid to make budgeting fun!

After all, money is the tool that can give you the freedom to create your best life.

Cheers to More Financial Freedom,

Val Breit

Val Breit empowers women to create a life they love with simple money hacks and productivity tips. Once buried in debt, stuck in a stressful 9-to-5 job, she hated that money stood in the way of her dream to be a stay-at-home mom. After getting intentional with how she spent her money and time, Val and her husband paid off $60,000 in debt. Now she is blessed to be a work-from-home mom, earning a full-time income online, doing work she loves.

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