A helpful guide to building a budget that actually works!

Are you tired of wondering where all your money goes? Tired of wishing you could save money instead of letting it slip through your fingers? Then let’s make a budget!

Now, I know that can be a really daunting and scary task. It can be really hard to examine our finances and reflect on the ways we’ve spent what little we have. But it is worth it. I promise.

So, if you’re looking to start a budget, but you have no idea how, then look no further!

1. Start with your income

I like to start with a pencil and paper to write everything down (in case things need to change), but if you prefer you can open up a document and complete everything that way, or you can print this pdf to make things easier! Budget Worksheets

There’s plenty of space so you can write in whatever you like! I like to separate some of my expenses from my partner’s so I can keep track of what we both spend.

Keep in mind, these are the worksheets for building an initial budget, figuring out your payments and figuring out how much you need to budget each month. The monthly budget that I like to use is a little different, since I prefer to break all my payments down by week/paycheque!

Anyway, let’s begin! First, write down your guaranteed income after taxes. This is the amount you’ll be working with throughout the month. I work a few casual jobs, but I never include this income into my budget. 

Only use your guaranteed income after deductions and taxes (ie: your take home pay).

If you work a job that has a changing/variable income, I would take a look back at the past few months and try to figure out the low-end amount that you usually make. Remember, if you earn more than you budget for, you can use that for savings or debt.

You never want to assume you’ll make more money and end up budgeting for more than you can afford!

2. Create your budget categories

Before you even look at what you spend, categorize all of the things you spend money on each month. To give you an example, here’s a quick list of some categories:

Budget Categories              Expenses
– House/renters Insurance   
– House maintenance   
– Mortgage/Rent   
– Groceries   
– Dining out   
– Cell phone   
– Electricity   
– Gas    
– Cable   
– Internet   
– Netflix   
– Xbox Live   
– Spotify   
– Health insurance   
– Medications    
– Fitness    
– Gas   
– Insurance   
– Vehicle payment   
– Auto maintenance    
Debt Payments  
– PLOC   
– Credit Card   
– Student Loan   
– Interest    
– Extra payment    
Quality of Life  
– Travel   
– Savings   
– Pets   
Just for fun  
– Holidays/gifts   
– Fun money for me   
– Spouse fun money   
– Clothing   
Yearly expenses  
– Sewer/water/garbage bill   
– Property taxes   
– Blog domain   
– Credit card fee   
– Apps   
– Internet security   
– Amazon prime   
– School supplies   
– Taxes   


Now, this is just a list of things I could think of: Your expenses may be vastly different. If I’ve missed any big ones, let me know and I’ll be happy to add them!

Keep in mind: you can always add or remove categories in the future. Life changes, so can budgets. 

Once you’ve got a general list, let’s take a look at your finances.

3. Look at your finances. Deeply.

Go through your bank records and break down all of the things you spent money on over one month.  In order to have a successful budget you need to get a realistic idea of how much money you spend each month. If you don’t know where your money goes, you can’t keep track of it.

For now, leave your yearly expenses section blank! We’ll work on that later.

4. Look at your payments

Once you’ve looked at all of your monthly bills, payments and spending, figure out what monthly payments always stay the same. When you know exactly how much your bill is going to be, it’s easy to budget for that category.

For example,

Every single month I know my internet bill is going to be $100. So when I’m creating a first draft of a budget, I know $100 needs to go to that category every single month.

Look back at your budget category list and write down all of the payments that stay the same each month. Your budget should now look something like this:

Budget Categories              Expenses
– House/renters Insurance  $120
– House maintenance   
– Mortgage/Rent   
– Groceries   
– Dining out   
– Cell phone  $130
– Electricity   
– Gas   $100
– Cable   
– Internet  $100
– Netflix  $15
– Xbox Live  $15
– Spotify  $15

I didn’t include the full budget, or all of my expenses, because I’m sure you get the idea!

5. Fill in variable payments

These are the amounts that can change each month, and potentially, the amounts you have a bit more control over. These often include groceries, dining out, gas for your vehicles, etc. Look through your finances and try to figure out a reasonable amount to budget for these categories.

At this point you may want to go back a few months and look at how much your variable expenses cost you. If in the past three months you’ve spent $600 on groceries, it might not be reasonable to budget for $400 unless you plan on making some big changes.

Remember: this is the first draft. Once you’ve written down what you think you need to budget for each category you can go back through and see what needs to change and what works.

Okay, your budget should be almost completely filled in by this point. That’s exciting stuff! You’re well on your way to having a budget. 

6. Yearly expenses

Next, go back through your banking and try to figure out what your yearly costs are. Once you’ve done that, divide each yearly cost by 12. This is the amount you will need to save each month in order to save up for that specific cost.

So if I have a yearly expense that costs $120/year you will need to save $10/month in order to save up enough.

But, this formula only works in year two of your budget (or after you’ve paid all your yearly expenses once).

Depending on when you start your budget, you might have a yearly expense coming up in a few months. That means that you need to divide that yearly expense by how many months you have to save.

If a yearly expense costs $60, but you only have 3 months to save, then you need to save $20/month.

Figure out when your yearly expenses come out, figure out how much time you have until you have to pay them, then do the math accordingly, budgeting for that amount.

After you’ve paid each yearly expense once then you can divide it by 12 and budget for that amount.

7. Add up your expenses

By now, your budget categories should be completely filled in. Add everything up and write down the total.

Next, look at your income. Subtract your monthly budget from your income.

How does your total monthly budget compare to your income? Are you living within your means? Overspending? Spending just a little too much?

This is the first draft of your budget: it can and will change as your financial situation does!

8. Examine your budget

If you’re budget is more than your income, look back through and see what you can change or alter. This might mean allotting a smaller amount each month for fun money, dining out, or other things in the ‘fun’ category. It might mean saving less. Play around with your budget until your expenses are less than your income.

As the next few months go by try to stick to the budget as best as you can. Don’t feel bad if you overspend in certain categories: it takes practice, but you will get there! And remember, certain categories might need to be changed throughout the process.

 Sticking to a budget is hard work, but having control of your finances is such a worthwhile reward!

I hope you found this helpful! If you did, please pin it to save for later!

Let me know if you have any questions about budgeting and I’d be happy to help. If you liked this check out tips for budgeting with a partner!


Here’s to a happier and healthier financial future!


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