How To Build A Budget

Everyone has to start somewhere. Whether you are a stranger to budgeting or have given it a shot but found yourself asking, “what’s the point?”. One thing is for sure, learning how to build a budget and maintain it doesn’t have to be complicated. After all, if it were, I wouldn’t be doing it!  It’s going to be simple, or it isn’t going to happen around here.

You have so much to gain.

The benefits my family has received from budgeting vastly outweigh any inconvenience in making and keeping a budget. If I could only suggest one process to implement to calm the chaos, budgeting would be that one thing.  When you have a plan for your money. And the peace of mind that there is enough to live on. This is the biggest step to calming the chaos of life. You can’t be the best you if you’re always worried about money.

Two things make up your budget:

Your income and your expenses, of course. More specifically, you need more income than expenses or else you have a problem.  There is not a budget out there that can fix a lack of income. But sometimes it can be hard to see how one’s income and expenses actually compare.  When you lay it out clearly, you to see where your money is going. It is always the “other things” that don’t make the budget that tends to be a shocker.

Good news! This a great place to look to start making cuts. It will make such a positive change in your budget. A lot of times the difference between a comfortable financial situation and one that feels like a losing battle lies in the little things. The things you do without thinking about. I refer to these as, “Extra Expenses.”  When you start tracking those transactions and plugging them in. You start to really feel the consequences of your spending.  It is only then that you have the tools to make a change.

So enough chit-chat about how important it is, how do you do it? This is how to build a budget….

(Please note: This process while not hard is difficult to explain in writing. I am so very passionate about helping others learn to budget. The peace it has brought to my family has been immeasurable. Please subscribe, and I will personally answer any questions you have about this process to get you on the road to budget freedom!)

• The “Monthly Income Summary” and “Monthly Bill Summary” are the necessary foundation you will need to formulate a budget that fits your needs.
• The “Weekly Allocated Detail” (both formats) and the “Budget Ledger” are forms that can be used in conjunction with each other. You also have complete freedom to use the parts that make the most sense or fit your situation.

Again I can not reiterate enough this does not have to be complicated. I tried to make formats so everyone could find a system that made sense to them. Please subscribe, and I am one very short email away to answer any questions you might have.

Let’s do this!

Download the budget form to follow along!

• Throughout the forms, you will see the terms “Prior Month Buffer” and “Beginning Balance/Buffer.” These terms refer to the money you carry over from one month to the next. This amount can be $100, or whatever you determine is necessary to make the stretch during a particular time of the month. (When bills are substantial, and the income dates do not align well.)

Monthly Income Summary

• Enter all of the income you can expect for a given month or budget period on the “Monthly Income Summary.”

Monthly Bill Summary

• Enter all of the bills that you have to pay within a given month or budget period on the “Monthly Bill Summary.”

Weekly Allocated Detail

• On the “Weekly Allocated Detail” (calendar format) fill in the dates of your budget period one of two ways. There can be a set month (May 1^st through May 31^st) or each budget period can start with the first income received during that month. Then extend out to the day before the first income of the next month. For example, if your first check in May is the 5^th and the first check for June is the 2^nd, your May Budget starts on the 5^th and extends through June 1^st. June’s budget starts on June 2^nd. My personal preference is to start each budget period on an income date (so I am starting my budget with a deposit of income). Then I just have to make sure that my budget covers anything that needs to be paid up until the first deposit of the next month. Once you establish this cycle, everything falls in line. You just have to pay attention to things due right around the change of budget periods. The budget period method works better for my family than the calendar month method. Our pay cycles and bill due dates work well with that method. Experiment both ways and see which one feel more natural for your family’s situation, if you are unsure.

Monthly Income Summary and Weekly Allocated Detail

• Next, use your “Monthly Income Summary” to mark your income dates in green. Write down the amount with a plus sign on your “Weekly Allocated Detail”. This makes them easy to spot when there is a deposit of cash, simplifying the budgeting process.

Monthly Bill Summary and Weekly Allocated Detail

• Then use your “Monthly Bill Summary” to write the bill into the “Weekly Allocated Detail” according to when payment needs to be initiated. Be mindful of when it is due, as well as the amount, using a minus sign to make this clear as well. (Please note in my example the bills are placed on the calendar on their due date as if they were auto paid on the due date not allowing mail time.)
• The “Weekly Allocated Detail” (fill in the blank format) is a complimenting worksheet to the calendar portion.  If laid out beside the other “Weekly Allocated Detail” (calendar format) it lines up for looking at each week individually. It is already clear if you have enough money to cover your expenses over the course of a month. This secondary sheet is a good way to make sure that you have enough money during a given week to take care of anything that is due at that time.  Depending on how your income and expenses fall you may find that this step is unnecessary. It will help you see how much you need to get built up in your “Buffer” to make the stretch during certain times of the month. Use this sheet at least at first until you get comfortable with the flow of your budget.

Budget Ledger

• Lastly, the “Budget Ledger” is a worksheet that works just like a checkbook register. It is a transaction by transaction record of your monthly budget. Just enter your starting balance we are referring to as a “Buffer.”

Weekly Allocated Detail

• Then take your “Weekly Allocated Detail” (calendar format) and use it to record everything that is on your budget in the order it is going to take place. Hopefully, this will be straightforward when using the completed calendar. As income is received or bills paid, you can check them off on the right-hand side.

You did it!!

I have included an example of each form filled out so you can see how it can be used.

Don’t forget to download your copy of the budget packet. You don’t want to miss out on this major game-changer!

Happy budgeting bliss until next time!

PS….feeling lost, no problem, shoot me an email, I’m here to help 🙂

PPS…..Here is a short and sweet post I did on why budgeting is so important.

Do You Have a Budget? Stop Financial Stress For Good