According to a Gallup poll, under one third of Americans keep a household budget. While that number seems frighteningly low, it’s not a huge wonder why. Budgeting can feel daunting and overwhelming, and when it comes to our spending, sometimes it can feel like ignorance is bliss.
Budgeting is not only effective at making sure that you’re spending within your limits, but also to give you full visibility to where your money is going. If additional expenses arise or you’re considering changing your financial situation, you can plug these changes into your budget to see what the implications are. For example, if you’re considering moving to a place with higher rent payments, you can plug that into your budget and see what that means for other expenses.
With that in mind, this post (and video below!) are all about how to set up a monthly budget that you can actually stick to.
I also have a FREE budget template which can either be used electronically in Excel or Google Docs (with formulas coded in!) or in hard copy as a free budget printable.
Find it in the FREE Resource Library under Personal Finance. Get access by signing up here:
How to Budget Video
To watch a video about how to budget including how to navigate the template, check out my video:
If you’d rather just download the template and get oriented through this blog post, I’ll explain the key sections here too.
If you haven’t yet, download it here:
Take Home Pay
This is where you include your net income every month. If you have multiple sources of income (from side hustles, for example), you can include additional rows to capture each revenue steam.
With the concept of paying yourself first, putting funds into savings accounts should be the first transaction once you receive your paycheque. I’d recommend reading The Wealthy Barber for more details on how much to save, how to invest it, and more. I’ve also written a blog post about how to automate your savings – check that out for more information.
These are (often ongoing) expenses that you must pay. This would include things like rent, car payments, and monthly parking spot rentals. In most cases, the actual cost of these won’t be fluctuating much over time.
These include everything from groceries to gifts and entertainment to utilities. These are expenses you have on a monthly basis that you have greater control over.
This is your “fun” money for small items like coffees and shopping.
The video above provides more detail about these sections.
Each expense type or category should be itemized as its own row in this column. You can add additional items or remove ones that aren’t relevant to you.
This is the amount you’re budgeting for each category each month.
The amount you’re actually spending on each item each month.
This provides space for additional commentary on any large or irregular expenses.
Again, more details about each of these sections can be found in the video above.
How to Set It Up
Enter your numbers in column “D” (the Budgeted column) and column “E” (the Actuals column).
Delete any rows that don’t apply and add any rows that are missing.
Each tab represents one month of the year. You can right-click on the tab at the bottom and select “Make a Copy” to make additional tabs, once you’ve set up a budget that reflects your financial situation. A reminder that the numbers in the sample budget loosely reflect Canadian averages but are included as placeholders only.
How to Stick To It
To make sure you’re contributing to your savings accounts every month, consider setting up continuous savings plans.
To stick to updating your budget regularly, block time in your calendar once a week to input your actuals. (And find advice here on how to rock at weekly planning!)
With respect to tracking your spending, collect receipts for your purchases. For cash-based purchases, keep track of how much cash you withdraw each month, and then enter that in the tracker. You can then spend that cash without double counting it as an expense.
Download Your Free Budget Printable
Don’t forget to download your FREE Budget Template/Printable to get started! Find it in the Beyond the Safe Harbor Resource Library. Get access here:
Also, be sure to check out my post 15 Things You Can Stop Buying to Save Money for inspiration on how to cut back your expenses. And my post The Best Money Advice I’ve Ever Received for more money tips!
Leave me a comment and let me know how you stick to your monthly budget!
Mimi K. says
I’m impressed with your outlook on spending and saving. You display a very solid value system that will serve you well.
A very wise woman is to thank for inspiring me!
It’s the “and stick to it” part I’m looking forward to. It’s always easy to divide my take-home pay into the different envelopes, but way more difficult to follow through in practice.