How to Budget: Step-By-Step Guide to Create a Personal Budget

Don’t listen to the “gurus” who say you don’t need a budget.

If you don’t know where your money is going, you have almost no control over your finances and are playing a dangerous game.

You might not be a fan of budgets, but you don’t have to feel limited about how you spend your money.

How to Create a Personal Budget You’ll Love

Step 1: Write down all of your sources of income

This first step is a no-brainer. If you have multiple sources of income, you have to sit down and write down how much money comes in from each source.

If you only have one source of income, like a 9-5 job, writing down how much you make each month should be easy.

If you have a side hustle or two, your income from those sources will vary month after

Step 2: Write down all of your fixed expenses

Fixed expenses are expenses that don’t change each month.

These include subscriptions, your rent or mortgage, the minimum credit card payment, car insurance, health insurance, phone bill, etc.

Make sure you take your time writing these because it is very easy to forget expenses, even when you pay them on time each month.

Download my FREE SGM Printable Budget Sheets to do all of this! Grab it below.

Step 3: Write down all of your variable expenses

Variable expenses are expenses that change each month.

These include the lunch you buy to eat on your lunch break, the coffee you buy

These expenses vary because maybe you skipped coffee one day, or maybe you opted in for a fancier, more expensive lunch. Maybe you decided to chef it up and purchased more groceries than usual to cook a high-end meal for your family.

You also want to take your time writing these down because as I mentioned before, expenses are very easy to forget.

Step 4: Go to your expenses and brainstorm ways to decrease them

Now you are going to go over every single one of your expenses, both fixed and variable, and think of ways you can decrease or eliminate some of them.

You might not be able to eliminate your fixed expenses, but you can think of ways to decrease how much you pay each month. For instance, you can get rid of some of your subscriptions (think Netflix, for example) if you don’t use it.

You can make your own coffee at home and bring it to work. Do the same with your lunch.

[Related: How NOT Buying Coffee Can Make You Rich]

Maybe you can also look into a more affordable car insurance and lower your monthly payments.

You can also call your bank and ask them to lower your interest rate since you pay your bills on time each month and are a loyal customer.

You have to analyze every single expense and think of ways to decrease them.

Download my FREE SGM Printable Budget Sheets to do all of this! Grab it below.

Step 5: Give yourself a maximum amount you want to spend on each expense every month

Now that you know where your money is going and ways to save more of your money by cutting down on some expenses, you are going to give yourself a monthly allowance per expense.

Yes, a budget.

The best part about creating this budget is the fact that you will not be making drastic changes to your lifestyle nor feel limited when it comes to your money.

You are simply replacing high numbers with lower ones by choosing better alternatives.

You’re also eliminating what doesn’t serve you and steals money from you (like subscriptions that you don’t use).

See? Easy.

Step 6: Decide how much you are going to save and invest money every month

Now that you have more money in your hands, you are going to decide how you are going to save more money, and how you are going to invest more money.

Of course, you have the right to use some of your money to have fun because you are human, so feel free to take your family out to eat or watch a movie.

However, you should also prioritize your future, especially after you retire, so you need to save more and invest more.

Step 7: Repeat once a month

It is completely healthy to sit down once a month and go over your monthly budget whenever you have financial changes.

These changes can be getting a new job, moving somewhere else, buying a home, pregnancy, getting a pet, etc.

NEXT STEPS

Download the free Printable Budget Sheets below so that you can keep track of your money, save more, and learn how to make your money work for you.