How to Make a Budget: A Beginner’s Guide

Creating a budget is a crucial step in managing your finances effectively. Whether you’re looking to save money, pay off debt, or simply gain a better understanding of your financial situation, a budget provides a roadmap for achieving your financial goals. If you’re new to budgeting and feeling overwhelmed, fear not! In this beginner’s guide, we’ll walk you through the step-by-step process of how to make a budget. By following these simple, practical tips and by using my free printables, you’ll gain control over your finances and set yourself up for a more secure and stable financial future.

Stay tuned for more in this Life Skills Series. I will cover everything from personal skills, health and safety, physical habits, vehicle maintenance, home skills, professional skills, and financial skills. If you missed the first post, check out the information on how to use a calendar/schedule here. Today we will cover: how to make a budget. Let’s get started!

You can get my free printable Life Skills Checklist for you to download and print from home. It is a digital product and will be delivered instantly to your email for you to download and print from your device.

A Beginner’s Guide: How to Make a Budget and Take Control of Your Finances

1. Assess Your Income: Start by understanding your monthly income. Calculate your net income (after taxes and deductions) and identify your regular sources of income, such as salary, freelance work, or side hustles. Having a clear picture of your income is essential for creating an accurate budget. You can use my Free Printable Financial Planner Pages to get started on your budget.
2. Track Your Expenses: To get a sense of where your money is going, track your expenses for at least a month. Make a list of all your expenses, including bills, groceries, transportation, entertainment, and discretionary spending. Consider using mobile apps or budgeting tools to simplify expense tracking. You can also hold onto your receipts to track your spending. You can read more on how to organize receipts here.
3. Categorize Your Expenses: Once you have a record of your expenses, categorize them into essential and non-essential categories. Essential expenses include items like housing, utilities, groceries, transportation, and debt payments. Non-essential expenses encompass discretionary spending, such as dining out, entertainment, and impulse purchases. You can use my free Bill Due Date Printable Calendar Page to write down the expenses that are due and when they are due each month.
4. Set Financial Goals: Determine your financial goals, whether they involve saving for an emergency fund, paying off debt, or saving for a specific purchase. Having clear goals will help you prioritize your spending and make informed financial decisions. You can get my Free Printable Goal Planning Page here. It can help you track your financial progress.
5. Create a Monthly Budget: Based on your income, expenses, and financial goals, create a monthly budget. Start with your essential expenses and allocate funds accordingly. Be realistic and consider areas where you can cut back on spending to free up money for your financial goals. If you need tips on What to Include in Your Budget read more here.
6. Track and Adjust: Once you’ve established a budget, track your expenses regularly to ensure you’re staying within your allotted amounts. You can do this by keeping receipts or by keeping a running list of how much you spend each day on particular items, such as drinks and food. Review your budget periodically and make adjustments as needed to accommodate changes in income, expenses, or financial goals.
7. Use Budgeting Tools: Leverage technology to simplify budgeting. There are numerous budgeting apps and online tools available that can automate expense tracking, categorization, and even provide insights into your spending habits. Find a tool that suits your needs and preferences.
8. Stay Disciplined and Flexible: Adhering to a budget requires discipline, but it’s also essential to be flexible. This is the part many people miss. You will need to adjust your budget from time to time. Life circumstances may change, unexpected expenses may arise, or you may need to adjust your financial goals. Stay committed to your budget, but be open to making necessary adjustments along the way. If you struggle with staying disciplined read my post here on Developing Self-Discipline: Life Skills Everyone Should Master. Financial Expert, Dave Ramsey also recommends using a cash system, so you stay in budget. The idea is that you use a cash envelope with enough cash in each category for that particular expense. When the cash is gone, you can no longer spend. Ideally, this should stop overspending.

Creating a budget is a foundational step toward taking control of your finances and achieving your financial goals. By assessing your income, tracking expenses, setting financial goals, and creating a monthly budget, you’ll develop a solid financial plan. Remember, budgeting is a skill that improves with practice, so be patient and stay committed. As you gain more experience, you’ll become more adept at managing your money, saving for the future, and enjoying greater financial stability.

Remember, the key to successful budgeting is consistency and mindfulness. With time, you’ll gain confidence in managing your finances and achieving your financial aspirations. Best of luck on your budgeting journey!