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Making a Budget for Beginners


Creating a budget seems easy, right?

However, many people struggle with making a budget that they can commit to. With traditional budgets, we write down our income, then our expenses and save, invest or give whatever is left over.

For most people, not much is left over after everything is paid. Traditional budgets tell us that everything else is more important than saving. But that doesn’t have to be the case.

Here are a few tips on making a budget for beginners that will help you save more and still pay all of your necessary expenses.

Get Organized

It is important to get organized and compile the documents necessary to help you build your budget or spending plan. Get copies of your most recent pay stubs for the whole month; bank statements for all savings, checking or investment accounts; and receipts for cash transactions (if available).

Having this information accessible and available will make it easier to build your budget.

Write Down All Income

List all of your income received within one month from work and/or part-time jobs.

Also, include any consistent income you receive from other sources, like child support, alimony, side hustles, etc. Writing down all of your income will help you understand how much you have to save and spend each month.

Commit to a Savings Amount

Before listing expenses, commit to an amount that you will save each pay period or each month.

For example, you may want to save 10 percent of your take home income, or you may want to commit to a certain dollar amount. Regardless of the amount, the key is to commit to saving something on a consistent basis towards an emergency, college or retirement savings account.

List All Debt

Besides a mortgage, there may be other debts paid monthly. List all the debts you owe with balances, monthly payments and interest rates you are paying. Include all types of debt like personal loans, auto loans, student loans, credit cards, taxes, etc. Listing all of your debts will help you create a realistic strategy to eradicate it faster.

List All Necessary and Flexible Expenses

Necessary expenses are the expenses that must be paid every month, like rent, utilities, transportation, insurance, groceries, etc. List all the expenses that are relatively the same amount every month that have to be paid to sustain your household.

Flexible expenses are expenses paid every month, but can be adjusted based on usage and are not necessary to sustain your household. Examples of flexible expenses are cable, cellular phones, dining out, etc.

Do the Math

Now it’s time to do the math. Add up each category separately and then subtract your savings commitment and total expenses from your total income. If you have money left over, CONGRATULATIONS!

This extra money can be used to beef up your savings, pay down debt or have some fun.

If you end up with a negative number, this means you will need to increase your income or spending adjustments will need to be made. Start by reducing or eliminating some of the flexible expenses, like dining out, cable, etc. until your budget balances out or you have a few bucks left over.

The best way to stay on track is to automate your bill payments and savings through bill pay service or your employer’s direct deposit system. Building the best budget takes time, so make the necessary changes until it works best for you.

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