How to Build a Budget in 4 Easy Steps

So maybe you have been wanting to create a budget because you know how important it is to track your spending, but maybe you haven’t because budgeting seems diffucult and scary. But it actually can be quite easy. If you have been wondering about how to build a budget, then keep reading to figure out how it can be done in four easy steps.

How to Build a Budget in 4 Easy Steps

How to Create a Budget in 4 Easy Steps - Calculator, Paper Clips and Post-it Notes

1. Determine Your Income

You need to first determine how much money you have coming in. So, pull out your paycheck stubs or look at the amount that is being pulled into your bank account by direct deposit.

Don’t forget to include any other income. A second job. Alimony and/or child support. A side hustle.

Decide how you are going to keep track of your budget. You can use an app that will help you track everything. Or you can go old-school and use a good old fashioned pencil and paper. (I personally like this method, but make sure you handwriting is legible.)

Or you could use a combo of the two. But whatever you use, make sure it works for you and dosen’t confuse or frustrate you. Now that you you know how much income you are dealing with, now you can review where it is going.

2. Figure Out Expenses

Next you need to list out all of your expenses. Categories you could budget for include:

  • Morgage or Rent Payment
  • Utilities
  • Transportation
    • Car Payment
    • Maintenance
  • Groceries
  • Clothing (For everyone in your family)
  • Child Care
  • Entertainment/Fun
  • Pet Costs

Now it is important to note that you may have expenses that aren’t a monthly occurance, but they still show up. Make sure to account for these as well, so they don’t sneak up on you and you are caught off-guard by them.

3. Calculate the Difference

The trick with a budget is to get your expenses to be lower than your monthly income. This can be easier said than done. If you find when you are building your budget, that your expenses are higher than your income you have two options. And it is perfectly valid to take advantage of both options.

1. Spend Less

Look back at the budget you just created and figure out what can be reduced. Are you spending too much on your groceries every month? Can you buy fewer clothes? Is it possible to make your own coffee instead of buying it?

2. Make More Money

There are plenty of opportunties to make more money online or offline. You could get a part-time job. You could start a blog. You could become involved in affiliate marketing. You could sell your crafty items on Etsy. You could resell items on Ebay. 

4. Track Your Spending and Make it a Habit

Now you don’t want to just set your budget and forget it. Because then you won’t probably won’t stick with it. When you are first starting to create your budget it is important to review every week, so that you can see where you are succeeding, where you might need to save money, and what needs to change. Every month, reevaluate your budget, see where adjustments need to be made.

Final Thoughts

Building a budget doesn’t have to be hard or scary. It is actually quite simple, if you follow these four easy steps.

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