How to Budget

How to Budget

Does your budget need a little TLC? Or maybe you don’t even a have one, so you need help learning how to budget?

Budgeting can be discouraging, I know. It’s difficult to figure out your budget in the first place, and then it’s tough to discipline yourself to spend accordingly. And when things go wrong, it’s all to easy to blame the budget and discard it.

However, when you persist and work hard to create a budget you can stick to, it will suddenly seem like you have more money.

You will finally know how much you are spending, and what you’re spending it on. You’ll be able to see which categories you can trim and how much so you can actually save money and make progress on your financial goals.

You’ll be able to hold yourself accountable for poor spending habits and debt, and you’ll be able to stop wasting money. You’ll finally be able to find a way out of the vicious debt cycle and be able to save money!


My Story

I grew up in a large, single income family. And my Dad didn’t make all that much. Luckily, though, he was really great at budgeting and spending wisely. He was the inspiration behind my post 37 Frugal Tips From an Extreme Cheapskate.

I learned and embraced most of his frugal ways, including his budgeting skills. So when my husband and I got married and started our family young, while still in college, I had no problem keeping our finances in the black.

My husband worked a part-time engineering internship (which paid a pittance) while earning his degree full-time. And I was a full-time mommy of two while going to school part-time.

We lived on less than $10k a year, as a family of four, during the first several years of our marriage. We paid tuition and books every semester, and we stayed completely debt free.

We owe that, in large part, to my mad budgeting skills. But I would be remiss if I didn’t acknowledge Heavenly Father’s hand in our finances. He loves His children and wants to bless them with all that they need and more. Even now, with a much larger income, I see His hand in all of our financial blessings.

You don’t have to make a lot of money for your budget to work. You don’t need to spend a ton of time on it. And you don’t even have to know a lot about finances. All you really need is a sincere desire to make it work, along with some girt and determination.



What is a budget?

Budget is defined by the dictionary as an estimate of income and expenditures for a set period of time. In layman’s terms, it’s a plan that you create for your money, based on your goals and desires. You estimate how much money will come in during the months ahead and you allocate enough money to cover your expenditures, including savings and investments.

I like how Dave Ramsey put it, “A budget is telling your money where to go, instead of wondering where it went.”

Budgeting seems simple enough, right?


How to Budget



Learn How to Budget in 5 Easy Steps

The best way to stick to a budget is to start one.

Whether you’re trying to get out of debt, or working toward a big, fabulous goal, creating a budget is the way to make it happen. I’ll walk you through the process.

You’ll probably want to do this the old-fashioned way, with pencil and paper, the first time through. I’m a spreadsheet kind of girl, because I love that Google Drive will keep track of everything for me. My kiddos run off with anything that isn’t nailed down.

But for the first time, I think pencil and paper will better help you to see where everything is going. It’s a good idea to dedicate a notebook or planner to budgeting, so you can track all of your income and expenditures in one place.

1. Calculate your monthly income.

When it comes to creating your budget, your net income is all that matters. Don’t include the amounts deducted from your gross pay, such as taxes, retirement plan contributions and wage garnishments, because you’ll never see them. You can only spend/save your take-home pay.

If you earn a regular salary, it’s pretty easy to calculate how much you earn each month. If you earn an hourly wage, or have inconsistent income, you’ll probably want to average your earning over several months time to calculate your monthly income.

Be sure to include any extra funds that come your way throughout the year, such as social security, disability, child support, alimony or a pension. Don’t forget cash gifts, side hustle income, interest, dividends and rental income.

Add everything up and write down the total.

2. Add up your expenses.

Your next order of business is figuring out exactly what you’re spending each month. It can be difficult to remember all of your monthly expenses. Start by listing out the bills you pay each month, such as rent or mortgage, utilities, insurance and taxes, loans and subscriptions.

Then add in your variable expenses, like groceries, gas for your car, and possible clothing expenditures. Don’t forget bi-annual or less frequent expenses. We pay our car insurance twice per year, and our homeowner’s insurance yearly. Consult your bank and credit card statements for the past year to help you remember the more obscure details.

A forgotten bill can really throw a wrench into your budget. It’s a good idea to plan for unexpected emergencies, too. A good rule of thumb is to add an extra ten percent to your expenditures for unforeseen expenses.

The more detailed and thorough your budget is, the stronger it will be.

Assign each of your expenses a category: savings, mortgage/rent, utilities, groceries, clothing, entertainment, etc… Write all of your spending categories on a separate page in your notebook, so you can see how much you’re spending in each category.

Add up everything you spent for the year and then divide by twelve to get your average monthly expenses. Write that number down.

>>>Want to save money on groceries??? Find out how here…<<<

3. Compare your income and expenses, and set financial goals.

Subtract your monthly expenses from your income. You should see a surplus, however small. Your income should always exceed your expenses. Any surplus should be earmarked for savings and investments.

If you see a deficit, you’re spending more than you are making. You probably already know if this is happening, though you might be confused and wonder where your money is going. This is where a detailed spending record can help you trim your expenses. Study your expenses, decide exactly where you are wasting money, and decide what to cut.

If you can see that you’re spending more on eating out than on groceries, consider a moratorium on eating out. If your families cell phone bills are through the roof, consider a prepaid plan, or a fixed amount of data.

At this point, you need to cut expenses until your budget is in the black. Ultimately, you’ll want to cut enough so that you can add ten percent of each month’s income to your savings account. This is where you adjust the amounts being spent in each of your spending categories.

I find it helpful to make savings a category all by itself, and to pay that category first, before I start paying for groceries or utilities or anything else.

If you are unable to cut a sufficient amount from your budget, consider ways you can increase your income. Can you work overtime, start a side hustle or find a second job a few nights a week?

>>>Cut Your Electric Bill in Half With These Easy Tips<<<

4. Track your progress.

Tracking your progress is one of the key factors in making your budget work for you. If you don’t track your expenses, you won’t know how much you’ve spent, and you won’t be able to stick to your budget.

Having to record expenses will also cause you to think twice about splurging. Who enjoys writing down the naughty things they did?

If you consistently overspend in one category, but you have recorded expenses, you’ll be able to see where your budget is unrealistic and you might need to transfer money between categories — adding money to certain categories while reducing it in others.

Be sure to record your successes, too. It’s so motivating to record when you’ve met a savings goal or paid off a debt. It makes you want to work harder and do more, and it makes the difficulties seem less huge.

5. Revise your budget as necessary.

Take time towards the end of every month to adjust next month’s budget, based on what worked or didn’t work in the previous month’s budget. Be sure to take into account your feelings about the process. If you end up feeling deprived, or that you are sacrificing too much, it will probably be very difficult  to stick to.

You might lack the will to live without your daily caffeination, while another person will simply die without a new pair of shoes. This is your budget. You make it work for you. Make it comfortable enough that you can follow it willingly.

You’ll find that after awhile, you are pretty happy with your budget, so revisions consist solely of making changes based on goals — saving more toward a new vehicle or a fabulous vacation. That’s when things get really exciting!



A Few Basic Budgeting Tips Everyone Should Know

  • The best tip anyone can give you is to just start. It doesn’t matter what your situation is — just get started.
  • My second best tip (maybe it should be my first) is to pray over your finances. Your Heavenly Father wants to bless you with all you need.
  • Designate your savings as an actual category in your budget, and always pay it first.
  • Use cash instead of credit. Credit cards are great conveniences, and I love, love, love that they automatically record my purchases and place them all into a pretty pie graph for me. But they’re also easy to overuse. When you spend cash, you’re actually limited to what you have on hand. You can’t overspend. If credit cards have already proven to be your downfall, don’t use them.
  • Avoid temptations. I know I can’t withstand the temptations in Target’s home decor section, so I avoid it like the plague. If you’re a purse-aholic, don’t visit the purse store.
  • Don’t confuse luxuries with necessities. Eating is a necessity. But bringing a sack lunch from home fills that need just as well as an expensive lunch at a restaurant.
  • Sweat the small stuff. If you have a morning coffee habit, tally up what you spend each month. You’ll be shocked at how quickly all those $5 lattes added up. Consider bringing your own coffee from home.
  • As your income increases, consider maintaining your lifestyle instead of stepping it up. Allocate the entire raise to investments or savings, instead of a car payment to really get a jump on your finances.
  • Use a budgeting app or software to track your expenses. They can save you time and make it easier to manage your budget each month. There are a wide variety of options you can use to manage your finances.
  • Always budget with your spouse if you’re married. Budgeting always works better when all involved parties are on the same page.
  • Wealth is not about how much money you make, it’s about how much you manage to keep.
  • Be kind to yourself. Try to stick to your budget most of the time, and you’re bound to reach your financial goals. Occasional budget mistakes are not the end of the world as long as you get back on track as soon as possible.






You’ll enjoy the following financial posts:

7 Genius Money Saving Hacks

37 Frugal Tips from an Extreme Cheapskate

Live Like a Billionaire: Frugal Habits of the Wealthy

Conquer Debt Once and For All

Stop Wasting Your Money: 10 Frugal Habits You Need



Pin these handy budgeting suggestions for later!






Similar Posts


  1. I will have to share this post with my financial advisory firm via LinkedIn. Thank you for making the topic on budgeting so simple.

    1. Amy Saunders says:

      I feel like it’s best to keep budgets simple, as much as possible, to increase the likelihood that we actually use them and stick to them. 🙂

  2. Budgets have come and gone at our house. I have found that the making of the budget isn’t as important as the keeping to the budget! 😳😃

    1. Amy Saunders says:

      You are SO right, Karen! Good financial management is like anything else — eating healthy and exercising, marriage, home maintenance and repairs — it needs to be constantly nurtured and adhered to. 🙂

  3. This is a great guide to budgeting! We have a general budget, but I need to be better about keeping an actual income. And wow ! 10k a year – that’s impressive!

    1. Amy Saunders says:

      Yeah, things were pretty tight! I think we were under 10k a year for the first 4 years of our marriage, and we had two kiddos during that time! Plus we paid college tuition and books since hubs doesn’t believe in Pell Grants.

  4. Budgeting is so hard for me — especially now that I’m freelancing and have an unpreditable income. These tips make it seem a little easier. I’m definitely going to work a little harder to get my finances in order with your tips!

    1. Amy Saunders says:

      I love helping people learn how to budget. I’m so glad I could help!

  5. This step by step is so easy to follow. It should be easy for someone to get over the hurdle of not knowing where to start after reading this post.

    1. Amy Saunders says:

      Thanks, Jaime! That was exactly my intent. Budgeting SHOULD be really simple and easy. 🙂

  6. I was an excellent budgeter when I was going through school & we lived off my husbands income but I have definitely gotten more lax since I started my full time job. Great tips, I really need to get back on top of it.

    1. Amy Saunders says:

      I feel ya! Budgeting is one of those habits (like eating well and exercising) that is easy to let slide when we step into the next phase of life. Every time I start wondering where all my money went is when I know I need to refresh my budget. 🙂

  7. I am absolutely the worst person for budgeting and my husband is not much better!! We find we get a plan going but then stuff happens and life gets away from us and next thing we spent the week eating out for dinner!! Thank you for this simple info that even I can start with!!

    1. Amy Saunders says:

      Glad I could help, Diane! I know exactly what you mean about life getting away from you. That’s why we have to have good financial habits, including knowing how to budget, so that they are habits and are second nature to use — so we don’t have to even think twice about making good financial choices — even amidst the chaos. I know you can do this!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.