How To Make a Budget

Girl writing on a notepad and looking at her laptop

Whether you are a beginner at making a simple monthly budget, or whether you’ve tried other methods to control your money, making a simple household budget is going to change your life for the better.

It works for whether you have a large income, or whether you are managing on a smaller one. So read on..

Do you ever feel like..I can’t believe it – where has my money actually gone? Like it’s some kind of mystical being with its own mind. Well, good news – you can control your money and make it work for you.

Budgeting has changed my life and it can change yours too!

Take Back Precious Time With Your Family

    Build  Confidence in You and Your Money Goals

Budgeting can help you get out of debt, save more and build your financial future. Our budget planner has it all organised so you can do all these things!

$7 Downloadable PDF 

  • Budget your income
  • Track your debts
  • Set and organise your savings goals and sinking funds.
  • Make your monthly paycheck budget
  • 8.5 x 11″ – 86 Pages in Full Colour

Commit to making this happen

To make this work, you have to dive right into the process. Yah – scary right? But I can tell from experience, the feeling of having money wins is well worth the commitment.

That sinking feeling of…the car’s broke! $500 later – this happened to me 6 months into budgeting.

Brilliant thing is I had an emergency fund saved, so I hardly felt the anxiety, the nausea of handing my card over. This time, I had not used my credit card!

Are you ready to learn how to make a monthly budget?

Things that will be covered in this post:

  • Commitment to your budget
  • How to keep track of your budget
  • Budget worksheet
  • Budget apps
  • Bullet journal
  • What your household budget should cover
  • How to make a realistic budget
  • 50/30/20 budget
  • Envelope system
  • Zero based budget

How to keep track of your budget 

It’s completely up to you how you record your budget.

Personally I use a printed planner, with cash envelopes. Below are the options for recording your budget.

Before we begin, you may want to download my FREE budget form by filling in the pink box below:

Budget Worksheet

Using a budget worksheet is a manual way of recording your household budget. I use this method. It can take longer, as you have to copy out all the key information from your budget every month. Printable budget sheets are available from many sites. It makes sense to try a free budget sheet, before committing to anything that you have to pay for.

Budget planner sheet 1 close up for July 2019

Budget planner page 1 July 2019 close up

Budget planner sheet 2 for July 2019

Budget planner page 2 July 2019

Budget planner sheet 3 for July 2019

Budget planner page 3 July 2019


  • The slower process makes you more aware of exactly what is happening with your money.
  • This process is not automated, so it puts the responsibility on you to be more accurate and honest with yourself.
  • You only need to adjust budget items when they change. No need to write out budget items every month.
  • Cute and colourful – they can be fun to use and very motivating!
  • Easily customisable


  • The budget sheet method can be a slow process every month,  writing your budget out by hand.
  • Don’t track your progress over time automatically – you have to do that yourself, on a separate sheet.
  • Not the most environmentally friendly – printing and paper cost.
  • You could miss a payment due out because let’s face it – we are all human.

Budgeting can help you get out of debt, save more and build your financial future. Our budget planner has it all organised so you can do all these things!

Start your budget journey today!

Best Budgeting Apps

If you prefer a modern, techie approach, which does it all for you, then a budget app is worth thinking about. They allow you to see your progress all via your phone,on the go.

If you want to use the 50/30/30 method of budgeting, Personal Capital is a great free app to use.

Other free apps in the US include:

  1. Spendee
  2. Mint
  3. Pocketguard

woman looking at her smartphone on the side of a road

You Need a Budget is a great example of a subscription based budgeting package, with a phone app, that also includes support from their team, to enable you to create a successful budget plan.

In the UK, free budgeting apps include:

  1. Emma
  2. Yolt
  3. Money Dashboard
  4. Tandem
  5. Mint
  6. Cleo – AI app that can set your budget for you and that you can ask questions of, to check if you can spend, for example, the money on a coffee.

Halima, a fellow UK money blogger has put together a great guide to the best budgeting apps in the UK in 2021.


  • See all your finances in one place
  • Set up your own savings goals or financial goals.
  • You only need to adjust budget items when they change. No need to write out budget items every month.
  • Calculate things automatically for you – for example average spending by category, and set your budget based on this.
  • Add multiple accounts not just bank accounts. Add credit card accounts, storecards and more.


  • Most budgeting apps react to your spending, rather than control it from the beginning.
  • Sometimes your purchases can become placed into multiple categories or into ‘uncategorised’, leading to you needing to go in and attach categories to them yourself, to make sure you have an accurate budget picture.
  • Most of them can tell you the progress you are making, and how far over or under budget you are. They won’t make decisions for you.

Bullet Journal

bullet journal open on a desk

Bullet journals are becoming increasingly popular now.

So what is a bullet journal?

Kim from sums this up brilliantly:

A Bullet Journal is an analogue system created by Ryder Carroll, a Designer based in New York. In his words, the Bullet Journal is meant “to help you track the past, organize the present, and plan for the future.” It’s an amazing system that keeps a record of everything you could ever want to toss at it. It can be your task manager, sketchbook, journal, idea catcher, and much more!

Define a bullet journal in simple terms Elly…

The Bullet Journal is a organizational system in a notebook that keeps track of anything you would like to write down in an coherent way.

Thanks Kim – so a bullet journal can be used to record your budget too.


  • The Bujo analogue system is adaptable and flexible – you can develop your own version. So using the Budget Journal to track how many Starbucks coffees you have bought, or how much you have paid off a loan this month.
  • Offers a creative outlet. You can customise your budget journal with drawings, colors, fun writing.
  • Bullet Journals could be said to be more secure – if you lost your journal, you’d be gutted right? But nobody would have access to your bank account.
  • More entertaining – by making the bullet journal about you and customising it, you are possibly going to stay more motivated to achieve your goals.


  • Creating a bullet journal from the beginning can seem pretty scary. So much to learn at once – it can seem overwhelming, especially if you are also trying to learn how to budget also.
  • Bullet journals can be time consuming – setting them up, producing the motivating artwork, planning where each topic is going to go. This could take time away from actual budgeting.
  • Bullet journals can be expensive. It could be tempting to buy a beautiful one online, when really a normal notebook will do. If you want to buy high quality pens, highlighters and everything else, this could potentially be expensive to set up. Before you even begin your monthly budget.


What your household budget should cover 

Now I am going to guide you step by step as to how to create your monthly budget. You may be asking right now:

  • What should my budget include?
  • What information do I need?
  • Where do I start?

Work out your income after tax

If your income is stable, you will be able to do this by checking your payslips. What you need to enter into your budget is your net pay. This is pay after tax.

The other way to do this would be to check your pay amount into your account. This is as long you know that you have been taxed first.

If you still need to pay tax on this, you will need to remember to save a portion for paying tax.

Remember to save a portion of your income for tax, if you haven’t had it deducted before you are paid.

How do you budget if you get bi-weekly pay?

You will need to split your budget in half by date. So every bill that comes out between the 1st and the 14th, pay with the first paycheck of the month. 

If you have money left over, ensure you have enough left over to cover the bills for the second half of the month,before sending the extra money to other places such as: debt, savings or purely to spend. 

Pay the bills from the 15th until the end of the month with the second paycheck. You will need to split your budget in half by date. So every bill that comes out between the 1st and the 14th, pay with the first paycheck of the month. 

If you have money left over, ensure you have enough left over to cover the bills for the second half of the month,before sending the extra money to other places such as: debt, savings or purely to spend. 

Pay the bills from the 15th until the end of the month with the second paycheck.

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Do you need help with how to make a budget? Read my guidance on how to set up your monthly budget, different types of budget, and sticking to your budget. #budgeting #howtomakeabudget #makeabudget #budgetsheet #budgetapp

Figure out what you owe

Note down every credit account you have apart from your mortgage. This could be:

  • credit cards
  • store cards
  • loans
  • overdrafts

To work out how much debt you have, you need to find out the total outstanding on each account. You could check on your latest statement, your app if you have one or simply by calling the company.

It’s also worth checking what the minimum payment is and what interest rate is on each account, so you are armed and ready to start, when you put your budget into practice.

The minimum payment is the lowest amount that the company will allow you to pay back. The interest rate is the percentage that the company are charging you to borrow the money.

Personally I like to write these down in order of interest rate and attack my debt using my version of the debt snowball.

Basically paying one debt off first, and only paying the minimum payment on the others. Then using the payment amount from debt 1 to help pay on debt 2.

It really is a personal preference on what to pay off first. You might prefer to pay off smaller debts first. In my approach, I prefer to pay off high interest rate debts first.

For each credit account:

Find out the balance

Find out the minimum payment

Calculate how much you already have 

So now it’s time to figure out and research what savings you have already. Note these down and the accounts they are in.

Work out your net worth 

Net worth basically means the total of what you own minus what you owe. Every month on my budget recaps I will now be releasing my net worth and track it over time. provides a superb net worth calculator to take all the head-mess out of calculating this.

Calculate your net worth every month using a net worth calculator.

 It will show you your progress over time.

Go through your recurring average expenses 

To do this, I review my banking app and write down my fixed expenses and what date they are paid.

I do this in date order and find that then I am less likely to miss something. Remember to include your rent or mortgage, as this is likely to be the biggest chunk.

For credit cards, you will have to look at the latest statement and the amount due to be taken, so your budget is accurate at the outset.

  1. 1Groceries
  2. 2Entertainment
  3. 3Subscriptions
  4. 4Transportation
  5. 5House expenses

Set savings and debt payoff goals 

Total up how much is coming out of your account, including credit cards at their minimum payment.

At this point, you should be able to see the spare cash total.

Are you spending more than you earn?

If the answer to this is yes, before you do anything else, you will need to see what areas of your budget you could trim down.

  • Do you really need your nails doing?
  • Do you need a large clothes budget every month?
  • What non essentials can you get rid of?

Have you got spare cash? Great!

So then you need to determine what your goals are:

  • Do you want get rid of debt faster using the debt snowball technique?
  • Do you want to start saving straight away for an emergency fund?
  • Do you want to do a bit of both?
  • Do you want to set up sinking funds?

What is an emergency fund?

Have you ever had something happen that you could never have predicted, and just as you feel like you’ve got a handle on your money…bam it happens!

Woosh – the credit card comes out to cover it – you sweat as you hand it over.

Your child needed an urgent operation and it was a fortune, or your roof has leaked in whilst you were away.

An emergency fund can help ease the panic of the situation, keep you out of debt and make you feel more in control of your money. After all you will have saved this amount in advance, just in case.

When I started this, I initially saved £1000, which took me 5 months.

Once you’ve saved this amount, then aim for two to three months pay in this fund, so that if you lost your job, you would have a cushion to help out.

Ideally save £1000 or $1000 for an emergency fund.

It really does take the pressure out of an emergency situation and leads to you feeling at peace that you can handle most things that happen, that are unexpected.

Save for retirement?

Another question to ask yourself is whether you need to allow yourself a payment into your account to pay into an account for retirement.

How do you make a realistic budget?

Making a realistic budget takes time – you could find, like me, that it takes time to adjust to budgeting, and your budget just won’t be perfect.

Writing notes on things that happen or things you learn can be really useful to remind yourself for the future.

Your budget is yours – no-one elses. It is an editable thing, so there is nothing wrong with editing budget amounts. It is also a deeply personal thing – what motivates you to stick to your goals is also something personal to you.

Don’t be too hard on yourself if you miss things initially. What you need to remember is that you are on the road to a better life, making your money work for you.

Usually I reflect on my budget just before I get paid the next time. I see what has worked and not and why. See my budget recaps for how I have adjusted my budget.

My household budget has forced us to be more realistic about what we are spending. For example, I have adjusted our grocery budget to be slightly higher, because we are eating at home more, and reduced our eat out budget by the same amount.

What is the 50/30/20 method?

Harvard expert on bankruptcy, Elizabeth Warren (U.S. Senator from Massachusetts and named by Time magazine as one of the 100 Most Influential People in the World) developed the idea of the “50/30/20 rule” for spending and saving with her daughter, Amelia Warren Tyagi. 

Set aside 50% of your income for things you need.

Then 30% is allocated to wants.

Put 20% of your income into savings or towards debt payoff.

The cash envelope method

This method is my absolute favourite and was made famous by Dave Ramsey.

He defines it as this:

The envelope system is a way to track exactly how much money you have in each budget category for the month by keeping your cash tucked away in envelopes.


So how does the cash envelope system work?

Basically,  it’s up to you how many items of your budget you control via cash envelopes. The system works very well for changeable expenses such as:

  • Toiletries and beauty products
  • Groceries
  • Eating out
  • Clothing budget
  • Treats for the kids.

It works really well with the budget worksheet approach, because again it is so visual. You can actually see physical money. This, for me, has changed my view of money and helped me to cut spending in key areas that I was overspending on! It has absolutely changed my life for the better!

Find out more about our budget planner

Zero-based budget

This is the idea that you start with your income and subtract everything you spend during the month.

After all these expenses come out, the remaining could go to savings, debt repayment or to another specific purpose.

Every dollar has a purpose, so you should get down to zero at the end of creating your budget.

In practice, I try to do this as much as possible, so my budget balances, and I have made the most of my money for the month.

But I have to acknowledge that I am only a human being and I will end up with unscheduled things that need paying for.

My answer to this is to have a £50 cushion every month, that soaks up these possibilities.


If you take one thing away with you, as you make decisions about whether or not you want to create a monthly budget, let it be this.

A personal budget is so individual to you. To your family. Your income. What you like to spend your money on. What your financial goals are.

Nobody can judge you on it and criticise if you overspend or forget to include something. It is your personal journey to discovery and your learning experience.

I have really enjoyed taking you through the basics of figuring out what you want from your monthly budget.  Really happy to help you lead your best life.