How to Create a Simple Budget

How to Create a Budget

Get overwhelmed trying to create a budget? I’ve got a simple way to create a very quick budget to help you at least get an idea of where you are with your income versus your expenses. This is helpful for those with irregular monthly income as well. As a side note, I like to call budgets, “spending plans” because that sounds like a lot more fun than budgeting. ?  

Okay, here’s the step by step instructions to creating your very simple budget aka spending plan.

Creating a Budget Step #1 – Figure out your expenses

Since we are keeping this very simple, I just want you to grab a sheet of paper or open a Google Sheet.

Now write down all of the fixed expenses you have each month. These are monthly amounts that don’t vary, or change, from month to month. Some examples are, a phone bill, rent, internet, etc. You can look at your credit card statements or checking account to get a rough idea of what you are spending each month.

After you’ve written down all the fixed expenses, write down all of the variable expenses you have. Expenses that vary from month to month. This could be groceries, utilities, clothing, etc.

Don’t forget to include any expenses you have throughout the year you don’t pay monthly. This could be car insurance, medical expenses, taxes, etc.

Also include expense line items for any debt payments you may have. Don’t forget to include paying tithing (if you do) and paying yourself. Paying yourself is the amount going to the most important things in your life. It could simply building up your emergency fund or saving a trip, but we want to make sure you are paying yourself.

Since we are keeping it simple, I want you to look over your expenses and decide what is a necessity and what is a want. Necessity would be food, shelter, insurance, etc. Wants would be things like eating out, movies, drinks at the gas station, etc.

Once you’ve decided what you absolutely need, total the amount and this will be your base amount for your expenses. Let’s err on the side of caution and estimate higher than lower.

Creating a Budget Step #2 – Figure out your income

Now look at your income sources. Write down how much you receive each month from all of your income categories.

This could be your standard paycheck from your 9-5 job, rental income, interest income, etc.

If you work for yourself this could be a little trickier to figure out, so find the lowest amount you’ve made in a month and use that for your base income amount.

Creating a Budget Step #3 – Net income

Now we know our base expenses and base income. Subtract your base expenses from your base income and this is your net income, what you have leftover after paying your expenses.

Then subtract out the non-necessity expenses as well, but knowing the total without un-necessary expenses would be what you could live on if you had to.

Make a plan for any leftover money so it doesn’t go to waste. You can pay down your debt, add to your emergency fund, save for something fun, etc.

If there’s not any money leftover then go back to your expenses. Look to see where you can reduce your expenses. Do you really need Netflix? Amazon Prime? Reevaluate what your necessities are and how you can reduce them.

Look at your income again. What are some ways you can increase your income? Get a side hustle. Offer your services. Teach a skill you have. Create a digital product. There’s lots of options out there. People are overwhelmed in a lot of areas, so find an expertise you could help reduce their overwhelm with while getting paid.

Creating a Budget Step #4 – Update monthly

Now that you have your budget set up, don’t forget to keep your budget up-to-date.

Schedule a time each month to review your budget and see how you are increasing your net income, or not increasing it… so you can make changes accordingly.

Hopefully this helps you budget your money a little better so you can plan for the future more easily. If you want a more detailed plan on budgeting with a template and ‘how to’ videos, check out my Budgeting Bootcamp Course, here.

Have more ideas about budgeting? Share in the comments below.

1 Comment

Leave A Response

* Denotes Required Field