If you make good money but still feel broke at the end of the month, you are not alone.
Recent reports show that around two thirds of Americans are living paycheck to paycheck, and many say higher prices make it hard to save anything at all. (Investopedia)
On top of that, surveys say most people already have some kind of budget, but less than one quarter actually stick with it. (Investopedia)
So the problem is not that you do not know you should make a budget. The problem is that no one ever showed you how to budget. What’s worse is that some of the chatter out there about how to make a budget is complicated and unhelpful.
In this guide, you will learn how to make a monthly budget that:
- Works even if you live paycheck to paycheck
- Does not require you to obsess over every little purchase (say goodbye to tracking every expense!)
- Uses simple bank accounts so money is organized automatically
- Lets you still be a little bougie where it matters
By the end, you will have a clear monthly budget plan, a simple budget sheet, and a basic system to run it.
In this guide, you will learn how to:
- Make a simple monthly budget that actually fits your real life
- Use separate accounts so you always know what is for bills, spending, and savings
- Run your budget on “easy mode” so it works even if you are busy and hate spreadsheets
What A Budget Really Is (And What It Is Not)
A budget is simply a plan for what your money will do each month.
That is it.
It is not:
- A punishment or restrictive
- A diet for your money
- Another reason for you to feel guilty
Done right, a monthly budget should:
- Tell every dollar where to go before the month begins
- Help you cover your must pay bills first
- Give you a plan for paychecks, debt, savings, and fun
- Help you feel more in control and less stressed about money
- Give you freedom and permission to spend!
People who use a budget report feeling more clear and more confident with their goals, because they actually know what is coming in and going out. (Corporate Insight Research Services)
So let’s walk through how to make a budget step by step, the Budget Besties way.
Step 1: Figure Out Your Real Monthly Take Home Pay
Your monthly budget starts with one thing:
How much money actually lands in your bank account each month?
We like to start with the best number: your income. Did you know most people don’t know what they make in a month? They’ve just never looked at it all at once. So, you’ll do that now. On your budget sheet you’ll first list your income.
We are talking about net income after taxes, health insurance, retirement contributions, and anything else that never hits your account. We don’t care about your gross income (we say gross is gross!). For your monthly budget, you only want to know what lands in your bank account.
Additionally, be sure to include ALL types of income when you’re writing it down: paychecks, child support, disability, bonuses, commissions, overtime, tips, side hustles and even money you made in a garage sale! When we say everything, we mean EVERYTHING. This is going to help you know exactly how much you have to work with for all the things you want your money to do for you in a month.
If you are paid once a month
Easy. List your take home amount along with the date it’s getting paid.
If you are paid every two weeks
Use a calendar to help you figure out when your paychecks will land in the month. Write down those dates and your paycheck amount.
Those paychecks are the money you have to work with for this month’s budget. Most months will have two paychecks. A few times a year you will have a “bonus” third paycheck month.
In our system, those extra paycheck months are planned on purpose. You can use them for things like:
- Building or padding your Bills account buffer
- Jump-starting savings buckets
- Making a big extra debt payment
But you still build your monthly budget from the actual paychecks hitting this month, not an average.
If your income is irregular
If your income changes month to month, try this:
- Look at the last 6 to 12 months of deposits.
- Find the lowest month and use that as your “budget income.”
- Anything above that lowest month becomes your bonus money for savings or debt.
This keeps your budget realistic instead of hopeful. Sometimes we use an average for clients instead of their lowest month. Either way, you want to go for a number that is nearly guaranteed. You want your monthly budget to be able to work off of this number. Then, on months when you have a higher income, you will still add that into the budget but you’ll be able to assign it to savings or paying off debt.
Write down your monthly income number at the top of your budget.
Step 2: List Your Minimum Debt Payments
Once your income is in, the next thing you do is list every single minimum debt payment.
For this step, debt includes:
- Credit cards
- Car loans
- HELOC
- Personal loans
- Student loans
- IRS or tax payment plans
- Medical debt
- Money you owe family or friends
If you owe money to anyone for any reason, it belongs here.
And we want:
- The true minimum payment
- The due date
Not the “nice round number” you chose because it felt good. If your minimum is $47 and you have been paying $75, you write down $47 here. The extra will have its own job later.
Why debt is Step 2
Putting debt here on purpose:
- Forces you to see how much of your income is locked up paying for the past
- Explains why you feel tight even when your income looks good
- Gives you motivation to stop leaning on credit cards AND to start paying them off
In fact, a lot of our clients have never added it up before. For example, one couple, Brittany and James, discovered that their monthly debt minimums were $1,774. Just seeing that number in black and white was a game changer.
We also use this information later when we decide which debt to attack first. Sometimes the smallest balance is best. Sometimes the debt with the biggest payment gives you the most money back in your budget. That is why our system includes:
- Debt snowball
- Debt avalanche
- A “minimum payment method” that focuses on freeing up monthly cash
You cannot make those decisions if you do not see all the debt lined up together.
Step 3: List All Of Your Bills
Next, you are going to list every bill with a due date.
A bill is anything that:
- Comes regularly
- Has a due date
- Will eventually come after you if you ignore it
Common monthly bills to include in your budget:
- Mortgage or rent
- Electric, water, trash, gas
- Phone and internet
- Tithes or recurring charitable donations
- HOA or country club dues
- Household bills:
- Security system or ring cameras
- Pest control
- Lawn care service
- Pool service
- Cleaning service
- Storage unit
- Insurance bills:
- Car insurance
- Homeowners or renters insurance
- Life insurance
- Disability insurance
- Health insurance premiums (if you pay these directly)
- Umbrella insurance
- Kids and school bills:
- Daycare or preschool
- Private school tuition
- After school care
- School lunch account
- Tuition payment plans
- Sports or activity dues that are billed monthly
- Memberships and subscriptions:
- Gym membership
- Costco or Sam’s Club membership
- Streaming services (Netflix, Hulu, Disney+, etc.)
- Music subscriptions (Spotify, Apple Music, etc.)
- Audiobook or podcast apps
- Cloud storage or photo storage
- Software subscriptions (Adobe, Canva Pro, etc.)
- Monthly boxes or subscription kits
When you put all of these together in your Bills section, you get a clear picture of your true monthly commitments.
Why we separate Bills from Spending
Most budgets toss everything into “needs vs wants” or “fixed vs variable.” That sounds smart, but it is confusing in real life.
We keep it simple:
- Bills are the things that are due whether you feel like it or not
- Spending is where you live your actual day to day life
Putting your bills in one place does a few important things:
- Shows you every recurring commitment on one page
- Helps you spot “bill clutter” from too many subscriptions
- Keeps you from hiding bills in random places like your credit cards or your personal money
All of these should be paid from your Bills account.
What is a Bills account?
It is a checking account that has one job:
- Your income lands here
- Your bills and debt minimums are paid from here
- You do not use this card at Target, Costco, Amazon, restaurants, or for kids stuff
Think of it as the grown up, responsible account.
If it has a due date, it comes out of the Bills account.
Your Bills account is the “do not touch” account that pays anything with a due date, on autopilot.
No more:
- One subscription on this credit card, three on that one, two on PayPal
- Random bills coming out of your gas and groceries account
- Hiding subscriptions in your spouse’s personal money
- Wondering if you can pay the mortgage because everything is mixed together
When every bill with a due date is in one place, you can open that one account and see instantly that your bills covered this month.
Fun fact: once we list this out, we often find that the bills are not the main problem. It is usually everything else that is eating the month.
Step 4: Plan Your Spending Money On Purpose
Now we get to the part of the budget where you actually live your life.
Welcome to the Spending section.
This is all the money you are going to go spend, swipe, tap, and “add to cart” with:
Common categories:
- Gas
- Groceries
- Restaurants / family fun
- Personal pocket money for each adult
- Kids money (field trips, birthday gifts, random kid things)
This is also where your “bougie on a budget” shows up. You give yourself permission to have fun, but with guardrails.
Why we use separate spending accounts
In our system, we often have separate checking accounts for key spending categories, like:
- Gas & groceries
- Family fun / eating out
- Kids
- Personal money for you
- Personal money for your spouse
On payday, money moves from the Bills account into these spending accounts. You then use the card attached to that account for that category.
What this does:
- You always know how much you have for gas, groceries, and fun
- You are not guessing what is “left” in one big account
- You do not have to micromanage receipts
Instead of trying to watch every purchase, you simply:
- Fund the account on payday
- Use that account until the next payday
- Stop when it is empty
It is simple, clear, and repeatable.
Kids and spending
This section is also a great place to start teaching your kids about money:
- Give them a set amount in a kids account or cash
- Help them look at what is coming up this month
- Let them decide how to use it
Now the money talk shifts from “no” all the time to “let’s see what is in your budget.” When they are old enough, you can let them decide when it’s a yes and when it’s a no which relieves you of that pressure!
Step 5: Add Month Specific Expenses
About 90 percent of your budget can look the same every month. That is the goal.
However, the part that changes is the “this month” section at the bottom of your Spending column.
Here is where you add things like:
- Holiday guests and extra food
- A college trip
- Senior pictures or family photos
- Extra school events, festivals, or markets
- Birthdays
- One time registration fees
- A quick trip you decided to take
If you do not have a savings bucket for it yet, it belongs here.
How this works in your budget
In your Spending section, you can structure it like this:
- Top: normal monthly spending
- Gas
- Groceries
- Restaurants / family fun
- Personal money
- Kids
- Bottom: this month only
- College trip
- Thanksgiving
- Birthday party
- Christmas market
- Any extras you know are coming
The “this month” items:
- Remind you to plan for things you would usually forget
- Funded with manual transfers from the Bills account
- Are the only part of the budget that should change a lot month to month
Everything else should feel boring and consistent.
Over time, as your savings buckets grow, fewer of these will live in the “this month” section because you will already have the money set aside.
Step 6: Create Savings Buckets
Now it is time to give the rest of your dollars a job by building savings buckets.
Instead of being just “extra savings,” these are specific, named savings accounts for the things that usually knock your budget off track.
Common buckets:
- Annual bills
- Christmas and other holidays
- Kids activities and travel
- Clothes and glam up
- Vehicle maintenance
- Home repairs
- Pets
- Medical
- Emergency fund
Why savings buckets matter
If you went back and looked at what you put on credit cards, you would probably see:
- Car repairs
- Christmas or birthdays
- Sports or activities
- Medical bills
- Travel
- Big one time bills
Those are savings bucket items.
So instead of letting these “unexpected” expenses surprise you, you:
- Decide what you want to fund
- Decide how much per month you can send there
- Give each bucket its own account
- Fund them automatically on payday
For example, Brittany and James decided to send about $2,800 per month into various savings buckets like:
- Annual bills
- Kids travel
- Christmas
- Clothes and glam
- Vehicle
- Home
- Pets
- Medical
Every paycheck, they watch those balances grow. The next time a big bill hits, the money is already sitting there. No panic. No new debt.
Step 7: Decide What To Do With The Extra
Once you have:
- Listed your income
- Subtracted your minimum debt payments
- Subtracted your bills
- Planned your spending
- Funded your savings buckets
You will see if anything is left at the bottom.
In our system, the basic equation looks like this:
Income
minus Debt minimums
minus Bills
minus Spending
minus Savings
equals Zero
If you are negative, something has to change.
If you have extra, that extra needs a specific job.
For Brittany and James, the numbers looked roughly like this:
- Income: 12,646
- Debt minimums: 1,774
- Bills: 3,149
- Spending: about 4,300
- Savings buckets: about 2,800
They still had $543 left.
They chose to:
- Add a line called “Extra on debt”
- Put the $543 there
Now their budget was a true zero based plan.
Why we do not sprinkle random extra payments
You might be used to:
- Sending an extra $20 here
- $50 there
- A random extra $100 to whatever card annoys you most
That is not a plan.
We prefer to:
- See all the debt minimums in one place
- Decide which debt will free up the most monthly cash or finish the fastest
- Aim all the extra at that one target
That is where our mix of snowball, avalanche, and “minimum payment” strategy comes in. The monthly budget you are building here gives you the numbers you need to choose.
What about being a paycheck ahead?
If you are a paycheck ahead, you can:
- Use the last paycheck of this month to start next month’s budget
- Walk into the new month with your Bills and basic Spending already funded
That is where the system starts to feel calm and spacious instead of stressful.
Step 8: Turn Your Budget On “Easy Mode”
By now you have your budget on paper:
- You know your income
- You see your debt minimums
- Your bills are in one place
- Your spending is realistic
- Your savings buckets are set up
- Every extra dollar has a job
The last step is where our clients usually say:
“Wait…why doesn’t everyone know this?!”
You don’t need another budget.
You need a budget system that runs AUTOMATICALLY in the background.
That looks like:
- Paychecks landing in a Bills account
- Bills and debt paid automatically
- Automatic transfers to gas, groceries, kids, fun, and savings happening on payday
- Money moving where it needs to go without you juggling it all month
- You always having money to spend and your savings buckets stacking up automatically
In other words:
You set it up once, and then it runs automatically (and a little bit automagically) for you.
We teach exactly how to:
- Choose and name your accounts
- Decide what to move on each payday
- Set up automatic transfers so your budget runs on “easy mode”
inside our:
If you are thinking, “This sounds amazing, but I need you to just show me what to click and what numbers to use,” that is your next step.
You bring your paychecks and real life.
We bring the system, the template, and the step-by-step so your budget finally runs itself.
Step 9: Run A 30 Day Experiment And Adjust
Your first month on a new budget is a test, not a final exam.
At the end of the month, look at:
- Did every bill clear from the Bills account without drama?
- Did your Spending money last until the next payday?
- Did any categories feel too tight or too loose?
- Did you actually move money into Savings the way you planned?
If you went over in a category, do not panic. You simply adjust the numbers for next month.
The goal is not perfection. The goal is to get into a rhythm where your money finally feels like it has a plan.
How To Make A Family Budget When Your Spouse Is Not On Board (Yet)
Fun, right?
A few ideas that work well for couples:
- Start with shared goals, not spreadsheets.
- “What do we want money to do in the next year?”
- “What would feel different if we were not stressed about money?”
- Focus on the Bills account first.
- Many couples like knowing there is a safe place where all the important stuff is handled.
- Give each person their own spending money.
- Even a small personal budget can take the pressure off every Starbucks run.
- Invite, do not nag.
- “I am going to set up a simple monthly budget so we can stop feeling behind. Want to look at it with me for 10 minutes?”
You do not have to be equally “into budgeting” to share a money system that works for both of you.
Common Budget Mistakes To Avoid
Here are the big traps we see over and over.
1. Making the budget way too detailed
If you have 47 line items, you probably will not keep up with it.
Start simple. You can add detail later if you need it. We also use spending CATEGORIES which makes it much more simple.
2. Forgetting about irregular expenses
Car tags, Christmas, sports fees, travel, annual subscriptions.
Use sinking funds in Savings so these do not keep blowing up your month.
3. Treating credit cards like backup income
A lot of people say they have a monthly budget yet admit they usually go over and then swipe a card to cover the difference. (NerdWallet)
Try to live on your planned income only. If you do use a card, write it into the budget, not outside it.
4. Never reviewing the plan
Even a good budget needs a quick check in at least once a month.
Ask: “Is this still working for us, or does something need to shift?”
Quick FAQ About Making A Monthly Budget
How do I make a budget for the first time?
Follow the steps in this post:
- Figure out your real monthly take home pay
- List your must pay bills
- Choose your top goal for the next 90 days
- Build a simple monthly budget with basic categories
- Set up a Bills account, Spending accounts, and Savings accounts
- Use our Simplified Budget System to set your budget up to run automatically!
- Review after 30 days and adjust
How do I make a budget in Google Sheets?
Just buy our Simplified Budget System and it is done for you. All the math, all the formulas, everything! Plus, it’s beautiful!
How do I make a budget when everything keeps going up?
You are not imagining it. Many households say higher prices are what keep them from saving. (Investopedia)
A few things help:
- Update your budget at least every quarter so it reflects real prices
- Shop fixed bills like phone, internet, and insurance
- Choose one or two lifestyle areas to trim, not your whole life
- Keep your main 90 day goal front and center so you remember why this matters
If you want help, grab our Simplified Budget System or start with our One Page Budget so you can plug your numbers into a done for you template instead of staring at a blank spreadsheet.
Budgeting doesn’t have to be the *B* word. It can be simple, and it doesn’t have to be restrictive! And the goal is not perfection, it’s just progress.
You just need a simple monthly budget and a system that does the heavy lifting for you. 💛