How to Make a Budget

“To budget or not to budget?”, that is the question. 

If you are starting your journey on getting out of debt or refocusing on your current journey, having a budget is a great tool in the fight against debt. Creating a budget that works for you does take time, effort and discipline (it took me a good 3 months to get a workable budget going). Follow these 6 steps to creating a budget and soon you will start to make your money dreams come true. 

1) Assess your monthly income. Gather your pay stubs together and figure out exactly how much you’re bringing in each month. You need to know how much money you have to work with before you start to budget.

2) List your expenses.
Print this worksheet Where Does Your Money Really Go? (PDF) to help you list your expenses in the following eight categories: Housing, Transportation, Insurance, Food, Personal Care, Medical, Children, and Miscellaneous. Use your spending notes from the <a href=””>last post</a>, as well as recent credit card and bill statements, for a complete look at your expenses. List each expense in the appropriate category. Then, total your expenses.

4) Subtract your total expenses from your monthly income. The goal is for your expenses to be less than your income. If they’re not, you’ll need to tweak it some so that they are. This may mean cutting back or cutting out things like going out to eat or cable television. If you have any surplus, put it into your emergency fund or towards your retirement.

5) Keep track of spending. After you’ve created the budget for the month, keep track of every single penny you spend to ensure that you stay within your budget. You’ll be able to review how much you spent the previous month and adjust your budget accordingly. One of the best ways I’ve found to keep track of your expenses is You can connect your bank account to Mint, and each week you’ll get a report telling you how much you’ve spent on groceries, gasoline, etc. It can be very helpful and eye-opening to see your expenses broken down into a color pie chart; you may be surprised about what portion of your money is going to things like eating out.

One of the best methods of keeping track of your budget is to put the money you budgeted for certain things, like groceries, into envelopes. You only use the money in the envelope when making purchases for that thing. When the money runs out, you’re done spending in that category for the month.

6) Review your budget every month.
Each month, go over last month’s budget to see how you did. You’ll be able to see where you did well and where you can improve. After you review, repeat the whole process and make next month’s budget.

12 thoughts on “How to Make a Budget

  1. Lydia aka Ms. MoneyChat

    i believe it was john maxwell who said, a budget is telling your money where to go instead of wondering where it went. i love it!

    one good thing about having and operating on a budget is it becomes less taxing the more you use it. after working my budget for several months, it became second nature. i went from working on it for a couple of hours a month to working on it a couple of minutes a month. getting over the hump and sticking with it are the difficult parts. once you’re over the hump, it’s much smoother.

    1. admin

      Oh, I like that saying from John Maxwell. A simple but rather smart statement. 🙂

      And you’re right, it does take time for it to work out the kinks and become second nature. Once it does its rather nice. I spend no more than 5-10 minutes a week keeping my budget and paying bills (love online bill pay). Sticking with it is my biggest obstacle. It helps me when I sit down the same time every week to work on it – then I am on a schedule to comply like its clockwork.

  2. Sharon

    I just did our 2010 family budget. I will have to cut some expenses so that I can pay for all the kitchen appliances I have to replace….not a pretty picture…

    1. admin

      But we will prevail as we are strong women wanting the best for our families. 🙂

      You will prosper in the things you need. And I can’t wait to hear when you do! Check out the department’s outlet stores – they really have good prices. It just won’t be the newest trend of appliance.

    1. admin

      Thx! Now if I will just stop tinkering with it and leave it as is!

      Budgets are me friend. Well, most of the time. I know the article may be basic, but its a strong basic tool to have in your files. I’ve slacked a little so it is nice to revisit the subject again.

  3. Denise

    Hi – thanks for your comment today on my blog. This is my first visit here – wow, lots to read. I’ll be back. I’d love for us to be FREE of debt – we’ve come far but still have a ways to go!

    1. admin

      Hi Denise, Thanks for coming over and checkin’ it out! Free of debt would be awesome. Tis a long journey but i hear it is WELL WORTH IT. 😉

  4. Devin

    Great post!

    If I may add, using has been tremendously helpful, especially when most purchases are made via debit or credit card. Combined with online bill pay (as you love so much!), budgeting has become a lot easier.

    The only challenge at this point is “sticktuitiveness” – like you mention above, scheduling a time each week to sit down for 20 minutes and ensure all finances are in order 🙂

    Thanks again!


    1. Money Funk

      I know many people who have done well from Thank you for the recommendation. And you gotta love Online Bill Pay. I insert all my bills once a month and wha-la! they are taken care of. One less thing to worry about.

  5. Deacon Bradley

    Awesome post Christine! I would argue that step 6 (review) is KEY to making it work. Many people make a budget each month that doesn’t work. Reviewing how awesomely wrong you were or how you failed to stay on track can be painful, but it’s the only way to get better. Your emphasis that it takes months to get it right is so true (took me 3 or 4 too, and I still miss the mark from time to time even years later). is a great resource for tracking your spending, and I think it’s important for people relying on this tool to understand how it works. Because it only downloads purchases that have ‘authorized’ (not ‘pending’) it can sometimes take days for purchases to show up on your budget. Just a pro-tip from someone who found out 3 days too late they bought too many groceries :).

    1. Money Funk

      Thank you, Deacon. Yes, you need to have a hand in budgeting. To recognize each time you sit down, if your money is going to the most respected areas. And it takes constant effort to make that time. But in the end, if my money has prospered via increased gains in my wealth/net worth… than it was all worth it.

      Another for Yeah! Oh, I am sure we’ve all learned those ‘pending’ lesson the hard way once or twice in our life. And if its more than that… then one may benefit from doing a cash only allowance for the week. 😉

      Thank you for sharing your thougts on this post.

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