Congratulations! My friend, you are a rock star who deserves to be celebrated. Why? Because you’re about to turn your financial future around, even if you don’t realize it yet.

Learning how to budget may seem like a daunting task, but it doesn’t have to be. Many of us have searched high and low for quick tricks and easy cures to our money ailments. Years of financial struggles and budget failures have crushed our money dreams…

But today we start to turn that all around! The solution has always been right in front of you, and we’re going to unlock that path together! You’re here now, and I am going to teach you how to budget in an easy, realistic way that will ease your financial pain and set you on the path to financial freedom forever.

Maybe you’ve tried budgeting before and failed. Maybe you’re at the end of your financial rope and you have no other options. Or, maybe your situation isn’t that dire yet, but you can’t shake the feeling that something is wrong. No matter what you try, you can’t seem to save any money, digging yourself deeper and deeper into debt with each passing day.

I know how it feels. I’ve been there before. I’ve struggled. I’ve been in debt. I’ve learned how to budget. And, I’ve overcame. Since then, I’ve never had to worry about money ever again.

Wherever you are on your financial journey, you’re in the right place to start making it better. Let’s do this, shall we?!?

Budgeting Can Be Learned

Seriously peeps, knowing how to create a budget is the most important money skill that you can learn. The great thing is that anybody can do it. All you need are a few basic skills and a tiny bit of effort. Once you master that, the tables will turn. You’ll be in control of your money instead of it being in control of you.

Once you know how to budget, juggling your money becomes a piece of cake. Need more money for food? Borrow some from entertainment. Is your money for car repairs a little short this month? Perhaps you can spend a little less on groceries. This guide is going to teach you how to balance your financial needs by telling your money to do what you want it to do. All you have to do is start…so let’s get to it!

Who Can Be Helped by this Budgeting Guide?

Learning how to budget doesn't have to be a chore. Take control of your money! Use this step-by-step guide to create a budget that actually works!Are you deep in debt and are desperate to find a way out? This guide will work for you. Do you a make a six-figure income but can’t figure out where all your money is going? This is the budgeting guide for you! Do you fall somewhere in between? Then this guide is for you.

If you want to learn how to budget and take control of your money, you’re in the right place! All I ask from you is to:

  1. Follow the steps provided.
  2. Try your best.
  3. Be honest with yourself.

If you can do those three things, you will definitely see positive results!

Who Will this Guide Not Work For?

This guide will work for anybody who puts in the slightest bit of effort. Period.

Still, although learning how to make a budget isn’t that difficult, it can be very difficult to stick to it. You will experience some setbacks. You’ll learn how your money mind works. You’ll get better at budgeting the more you practice it. But, even if you use this guide, there are still some ways you can fail. This won’t work if you are a:

  1. Whiny McWhinertons
  2. Blamey McBlamerpants
  3. Alotta Excuses

The point is this: You need to take control. You must be in charge. You need to tell your money how to behave. Nobody else can do it for you.

What you need to know is this: You have the power to do this. I believe in you, and I’ll teach you the skills you need to believe in yourself.

You Are Not Alone

You are not alone.

We have a gigantic budgeting problem in this country. For years, collectively, we have gotten drunk on the allure of easy money through low interest rates and easy access to credit. Rather than building wealth, building debt has become the new normal in this country. And it doesn’t just stop with our personal lives. It has bled over into public life as well.

We have become accustomed to buying things that we don’t need, with money we don’t have, to rack up debts we can’t afford…and it is slowly enslaving us to our creditors. So, what do we do when we can’t afford something that we want? We put it on credit.

We buy things we don't need, with money we don't have, to rack up debts we can't afford. Click To Tweet

According to the latest numbers from Nerdwallet, the average American household carries $7,327 in debt credit card debt alone. When you eliminate households without debt, that number balloons to an average of $15,706. So, the average household who carries a balance on their credit card owes $15,706. Ugly.

Need more proof that our financial priorities are skewed? Just take a look at how our government handles money. Just like in our personal lives, we’ve decided that it’s OK for the government to never tell itself “no.” Between the year 2000-2007, our national debt skyrocketed from just under $5.7 trillion to $9 trillion. Of course, we all remember what happened next. Our overreaching greed and complete lack of financial accountability caused a ginormous crash in the housing market which nearly crippled our entire economy.

Learning how to budget doesn't have to be a chore. Take control of your money! Use this step-by-step guide to create a budget that actually works!

Unfortunately, we still haven’t learned our lesson. Over the last 8 years, the national debt has more than doubled, sitting now at $18.4 trillion. Seriously, WTF?

We’re racking up a bill that our children and grandchildren are going to have to cover. Frankly, it is childish and it is wrong. We need to learn to live within our means. We need to learn how to budget. Until then, it is only going to get worse.

Our Budgeting Story

Gregholly NEWMy wife Holly and I have been married for almost 10 years. Since becoming married, we’ve always been frugal. We’ve cut coupons, shopped at garage sales, and bought most of our furniture on Craigslist. In fact, the first place in which we lived as a married couple was an apartment located above where I worked…in a funeral home.

As part of my compensation, we lived in the apartment rent-free. Even though we weren’t making much money at the time (about $30,000 combined), living above the funeral home allowed us to save a ton of money because we didn’t have any expenses. In fact, we’d managed to save about $10,000 after only one year.

Fast forward about 5 years. We had more than doubled our household earnings, bought a house, and invested in two rental properties. However, we came to realize that we weren’t saving any additional money. We still had that same $10,000 in the bank that we always had…and we couldn’t figure out why we weren’t able to save more. We decided that we needed to dig a little deeper.

What we found was disturbing. We realized that we were frittering thousands of dollars away each month. Among other things, our restaurant spending was completely out of control. To a couple of frugal fanatics like us, this was a shock…and completely unacceptable.

From that point forward, we decided that we needed to get on a budget. Through creating a budget, we began telling our money what to do each and every month. It was almost as if something magical was happening. We actually began saving…and saving…and saving some more. Just by keeping an eye on our money, we were able to save several thousand dollars in a matter of months. We ‘d finally learned how to budget, and we were hooked.

Since then, we’ve been able to become debt free (except for our house). Being debt free has allowed us to travel the world, quit our jobs, and generally lead a more comfortable life. We are no longer prisoners to our debt, nor do we ever worry about money. And it all started because we learned how to budget.

Why Should I Learn How to Budget?

Why does anybody need to have a budget? Here’s why:

  • It gives you a clear, visual picture of where you are at financially each month.
  • It helps you to save.
  • It teaches you to be disciplined with your money.
  • It requires you to face the actual facts of your financial situation rather than making assumptions about how good (or bad) you are doing.
  • It dictates to your money how it is going to work for you.
  • You will start to “find” money you didn’t know you had (or that you were spending).
  • You will learn how to live within your means.
  • You will be able to track and see the results.
  • Most importantly, it gives you control over your money and your life.

What is a Budget?

Now that we know why learning how to budget is important, let’s talk a little bit about what a budget actually is. Simply put, a personal budget is a financial tool that helps you plan for both your income and your expenditures each month. Basically, it is going to help us decide what we are going to do with the money that we make.

A budget gives you control over your money AND your life! Click To Tweet

The key to making a budget work is to balance the amount of money that is coming in with the amount of money that is going out. We’ll teach you how to do that in a little bit. For now, let’s focus on budget categories.

When you’re creating your budget, each expenditure will fall into a category. Some of the categories are flexible, and some are not. For instance, your mortgage payment is generally not negotiable. Furthermore, it isn’t going to change from month to month. On the other hand, your budget for food may be more flexible. One month you may only spend $300 on groceries while the next month you may add an extra $100 to go out to dinner on your anniversary. Just keep in mind that your budget needs to balance both the income and the outflow.

What a Budget is Not

Even though a budget is your most important financial tool, it is not a magic elixir. It isn’t necessarily the cure to all that ails you. Simply creating a budget doesn’t mean that all of your money woes will suddenly disappear. There are other factors that can influence your financial situation – like controlling your spending habits or increasing your income. Still, learning how to budget properly (and realistically) will help you discover money problems that you may not even know you had. And, once you learn how to start saving money and have some success doing so, it becomes extremely addictive.

Additionally, a budget is not just tracking your expenses. While expense tracking is important, that is not what a budget if for. Furthermore, making sure you have enough money to pay your bills and leaving the rest to chance is not budgeting. That is guessing. Simply put, a budget is your financial plan for the month. Following the steps to create a budget isn’t hard, but it will take a little bit of effort.

Don’t Be Afraid of the Budget

Learning how to budget doesn't have to be a chore. Take control of your money! Use this step-by-step guide to create a budget that actually works!A lot of people get scared off from budgeting because they think that it’s too restrictive. They are afraid that a budget won’t allow them to do or buy the things that they want. They’re scared that learning how to budget will force them to come to terms with their reckless spending habits…so they continue to live paycheck to paycheck, worried about whether or not they can make their next rent payment. In reality, they have it backwards. Those people may not be ready to change.

Yes, your budget will bring to light some uncomfortable facts that are hard to see. Yes, it may be shocking and a bit painful at times. Unfortunately, that is part of the process. It’s take a while for you to dig yourself this hole. And even though it hurts, the only way out of it is to go through it.

Putting yourself on a budget doesn’t mean that you can never have what you want. It doesn’t mean that you can’t go out to dinner, or to a concert, or to your favorite sporting events. All it means is that you plan for it, and you set aside the money accordingly. So, rather than scramble to find the cash, you simply plan ahead. Trust me, it feels waaaaaayyyy better to pay for something upfront than to put it on credit to pay back later. That’s a pressure that too many of us have hanging over our heads.

Learning how to budget isn’t a prison sentence. In fact, it is just the opposite. Learning how to budget is the key to your financial freedom. Learning how to budget isn’t an anchor that weighs you down. Your bad habits are what’s causing you all of that angst and turmoil. Your budget isn’t keeping your dreams locked up. Your debt is the prison sentence that is dragging you down financially and emotionally. Instead of dragging you down, learning how to budget is the most important piece of finding your way out.

What Tools Do I Need?

The great thing about making a budget is that it doesn’t take a lot of equipment to get started. Sure, you can use a fancy spreadsheet if you’d like. Of course, you can get online and use some fancy software to help you keep your budget straight. Those things are all fine, but they are unnecessary. Don’t let other people’s budgets or new technologies intimidate you into not starting! You don’t need that stuff. All you need is a simple pen and paper.

Yep. That’s it. In fact, that’s still what we use to this day. Each month, Holly and I take about 15 minutes to create and go over our budget. We get out our spiral bound notebook, think about the month’s expenses and income, and we get to work jotting it down. It doesn’t take long, but it is probably the most important money discussion that we have each month. Here’s a quick peek at an old budget of ours.

Budget photo

It’s not fancy, but it works.

Notice that I said we do this each month. Why? Because it’s that important. Don’t get lazy on me! A budget is a living, breathing document. You have to create a new one for every month. Each time the calendar switches, you’ll have different expenses that you need to account for. Sure, some of them are the same – like your mortgage/rent, electric bill, etc. – but a lot of expenses change. You may have a birthday party in June, but you’re going on vacation in July. Your budget needs to reflect this, so it is uber important that you update it every month.

So, let’s get that pen and paper and get to work, shall we?

How to Budget in 6 Easy Steps

All right, all right! Now for the main attraction…let’s get ready to create a budget!!!

Zero-Based Budgeting: Zero is the Goal

What you are about to learn is called a zero-based budget, sometimes referred to as a zero-sum budget. The goal of your new budget is make sure that your income and expenses are exactly balanced (“zeroed out”). You’ll do this on a monthly basis by giving every single dollar that you make a specific purpose. When you tell your money what to do, it suddenly starts to listen. It is almost like…magic!

This is so important I’m gonna use some fancy bold and italics to drive home my point.

Your income and your expenses should balance to the penny!  

You’re not rounding to the nearest $5. You’re not guessing that you’re gonna save about $200 this month. You are going to be specific. You are going to be exact. You are going give each and every dollar a job, tell it where to go, and take control of your financial life. You are in charge of your money, not the other way around.

Remember this: Budgeting is about details. If you take care of your pennies, you won’t have to worry about your dollars ever again!

Budgeting is about details. Take care of your pennies so you don't have to worry about your dollars! Click To Tweet

Here’s the simple formula you’re going to use to balance your new family budget:


Easy peesy, right? OK, let’s get started.

Step 1: Write it Down

The first step may be the most crucial step of all. In order to create a budget that works, you need to write it down.

Let me repeat that: You need to write your budget down.

It can’t be in your head. Keeping it there is a recipe for mistakes. It can’t be a guess. Guessing leaves far too much room for error. You need to be exact.

Your budget must be written down, clearly, so you can see it.

Writing it down can mean many things. You can write it down on a sheet of paper, like we do. You can use a nifty little spreadsheet (which you can get by clicking below). If you’re feeling super fancy, you can even use an online app like Personal Capital to help you with your budget. It doesn’t matter how you write it down. What matters is that it is written down somewhere where you can physically see it…with your eyes!

Click here to get your very own fancy budget spreadsheet!

Step 2: Determine Your Income

If you’re like most people, your income varies slightly from month to month. Because of this, many financial planners and budget coaches have you play a guessing game when it comes to determining your income. Not with us. We want you to be exact. Rather than use an estimate of future earnings, try using actual earnings!

To do this, just take your last paycheck and use it as the basis for that month’s earnings. Obviously, this works best if you only get paid once a month. However, even if you get paid twice a month, it will still work. Just adjust your budgeting schedule so that you’re creating a separate budget for each paycheck. For instance, all of your bills due between the 1st-15th should come out of the paycheck you receive on the 1st. All expenses due between the 16-31 should come out of the paycheck you receive on the 15th. If you want to simplify things, contact your billing companies so that your expenses are equally distributed across your paychecks.

Hot Tip: Create your budget immediately after getting paid. This will make it super simple for you to figure out how much money you have to spend.

So, at the top of your budget, go ahead and create a category for income. Add it all up, and jot the number down there. This represents all the money you have coming in. Draw a line underneath it and move on to the next category.

Step 3: Pay Yourself First

Immediately below your income category, you should create your first expense category: Savings. Yep, I want you to think of your savings as your very first – and most important – expense.

Before you even think about paying anybody else, you need to pay yourself first. Hopefully, you’re already saving at least 10% of your money in your employer sponsored retirement account. If you aren’t, get to it now!

Go ahead. We’ll wait…

Recommended Resource: The Automatic Millionaire by David Bach – This book does a great job about explaining the importance of paying yourself first. Mr. Bach also suggests that you should make your savings automated. This is a must read for anybody interested in saving more money. Click the link above to put it into your Amazon cart and buy it today!

OK. Now that you’ve got retirement covered, you need to put some money into other savings vehicles. If you don’t have an emergency fund, this is where you should start building one ($1,000-3,000 if you’re doing a debt snowball, 6-12 months of income if you have the ability to fully fund it). Now is when you should fund cash savings, additional retirement accounts (like your Roth IRA), and college savings plans.

Do it now, before you determine your expenses. If you have money left over after determining your expenses, shove it into your savings too! Pay yourself first!

Step 4: Determine That Month’s ExpensesLearning how to budget doesn't have to be a chore. Take control of your money! Use this step-by-step guide to create a budget that actually works!

Alright, now it’s time to determine your expenses. Place this section directly below the savings section on your budget worksheet.

First, break your expenses down into two categories: fixed and variable. Generally, your fixed expenses are those that stay the same each month. You have very little control over these expenses, but they must be paid all the same. Fixed expenses may include:

  • Mortgage or rent
  • Health insurance premiums
  • Life insurance premiums
  • Cable
  • Internet
  • Phone
  • Cell phone
  • Student loan repayment
  • Car payment
  • Utilities

Before you start, I understand that some of these aren’t technically “fixed” expenses. However, most of these things are expenses over which you have very little control. Of course, some of these expenses – like cable TV and your cell phone bill – are optional expenses. Nevertheless, if you pay for them, you know what they’re going to cost you each month.

Next, you’ll list the expenses over which you have more control. These types of expenses include:

  • Groceries
  • Entertainment
  • Restaurant spending
  • Clothing
  • Miscellaneous

Make sure to adjust these on a month-to-month basis or as the need arises.

Remember, every expense for the month must fit into one of these categories. Every single penny you spend (and earn) must be accounted for!

Step 5: Review and Balance

Good work! You’ve created all of your budget categories…but you’re not done yet. Now that all the hard work is done, you need to make sure that your budget is balanced. Remember, the ultimate goal is to “spend” every penny you make into your budget categories. Again, the formula you need to remember is this:


  • What to Do if You Have a Negative Number – If your equation balances to a negative number, you have overspent. You’ll need to make adjustments by cutting your expenses (preferable), cutting your savings (not preferable), or increasing your income by the amount you are negative. Once you’ve made the necessary adjustments, go back and run the equation again.
  • What to Do if You Have a Positive Number – If your equation balances to a positive number, congratulations! You have extra money in your budget!!! Quick, go stash that money in your savings account before you’re tempted to spend it.

Step 6: Repeat Each Month

Huzzah! You’ve just completed your first monthly budget! Now that you’ve got the template down pat, it will be even easier for you to complete each month.

If your budget fell apart this month, don’t worry. It may take a little bit of practice to get it right. We’ve all failed with our budget at one point or another. The important thing is that you now have the tools to make it work. Keep at it, and you’ll work out the kinks in no time.

Just to make sure you don’t forget the steps, I’ve added this handy little infographic for you to use. Go ahead and print it off so you can keep it at home. Better yet, share it with your friends on Pinterest, Facebook, or Twitter!

Learning how to budget doesn't have to be a chore. Take control of your money! Use this step-by-step guide to create a budget that actually works!

Budgeting Tips and Tricks

As I mentioned before, all of us have failed with our budget at one time or another. Along the way, I’ve learned a few things to help keep me on track. Here are a few quick tips and tricks to help you with your budgeting journey.

  1. Write it Down – If you remember nothing else from this piece remember this: Write. It. Down.
  2. Automate Your Savings – Think of savings as an expense – your most important expense – and pay yourself first. Have your saving automatically deducted from your pay check. You’ll see an instant difference.
  3. Reward Yourself – When you reach certain savings goals, give yourself a little pat on the back. It is OK to treat yourself sometimes…as long as you budget for it.
  4. Be Kind to Yourself – If you go over budget, don’t beat yourself up. This is a marathon, not a sprint. Analyze where you made mistakes, fix them, and give it your best shot again next month.
  5. Be Honest with Yourself – Don’t try to fudge on your budget by underestimating or guessing at expenses. This will not work. You must be exact. Be honest about where your money is going and you will see results.

Budget Accessories

Creating a budget that works is just one of the tools you need to have in your arsenal. Here are a couple more accessories that you should consider to get the most out of your money.

Expense Tracking

Tracking your expenses is an important part of taking control of your financial life. Think of budgeting as your game plan and expense tracking as your execution. You need to know where every penny of your money is going or it will disappear! By tracking your expenses, you can easily see where the holes in your budget may be.

Click here to get your free expense tracking worksheet!

Emergency Fund

The easiest way to destroy a budget is through unexpected expenses. Unfortunately, these are bound to happen. You can’t stop them. The only thing you can do is make sure that you’re prepared. That’s why having an emergency fund is so important. It can help you get through the tough times and keep your budget on track. Depending on where you are at in your financial journey, you may need to keep more or less money in your emergency fund. Personally, I like to keep 6-12 months of expenses there. This way, I can ride out any issues without having to destroy my savings goals.

Free Money Tools

Learning how to budget doesn't have to be a chore. Take control of your money! Use this step-by-step guide to create a budget that actually works!We don’t use a ton of apps, but there is one we use and HIGHLY recommend. It’s called Personal Capital, and it’s totally FREE! We’ve used it for years, and we love it. We use their “cash flow tool” to help automatically track expenses and keep us on budget. Just link your accounts, and the tool does it for you. (You’ll still have to account for any expenses you pay in cash.) They also give you free access to a retirement calculator, an investment fee analyzer, a net worth tracker and more. Frankly, we think Personal Capital has the best free money tools available. We’d love for you to click our link if you want to join. You’ll receive free tools, we get a small commission, so we all win! Read our complete review, or click here to join Personal Capital for free!

Wrapping It Up

There it is! You now possess the knowledge to create a budget that really works. By following these steps, you’re well on your way to taking control of your financial life!

For us, taking control of our money meant that we were able to get out of debt. That led to us quitting our jobs, starting our own business, and traveling the world! Who knows where budgeting might lead you!

In order to take control of your life, you have to take control of your money…and that begins with your budget. Now get after it, and start your first budget today!