How to Make a Budget (Even if You Hate Making Budgets)

I have started roughly 138 budgets in my life. Approximately.

I hated every single one of them.

I always thought of a budget as a diet for my money, a strict set of rules about what I could and couldn’t eat spend. Making a budget left me feeling deprived and angry, and wondering how in the hell I’d managed to afford the shoes I just bought, because on paper I sure didn’t have any money for them. I decided over and over again that ignorance was bliss, because ignorance let me buy shoes and food. I wasn’t sure why it worked in the real life when it didn’t line up on paper, but it did – so I stayed far, far away from the paper.

The problem was I had no idea how to make a budget or what in the hell a budget really was.

Learning how to make a budget isn’t about forcing yourself to spend less money. Learning how to make a budget is just about deciding and knowing how you’re spending your money.

Whether you write it down or not, you are spending money.

If you write it down, you are simply more aware of how you spend it.

Having a budget gives you the chance to put your money where your passion is, where your values, dreams, and goals are. Having a budget allows you a moment to actively choose between cappuccinos and mission trips, cable and travel. And if you can’t afford cappuccinos or cable? A budget can help you figure out how to change that.

Now, let’s get to it.

How to Make a Budget

There are a lot of fancy programs you can use that can help with this process. I use Microsoft Office Excel because it’s easy and didn’t require another investment. I also use a box of envelopes I bought at the dollar store. I am super fancy and you want to be just like me when you grow up, I know.

1. Figure out how much money you have right now.

You don’t have to wait until the 1st or the 15th or a Monday. You can make your first budget whenever you’re ready. Just start.

The very first step is to know exactly where you’re starting from.

2. Pay any bills that are due right now.

I just recommend this so that you can get yourself to a true starting place. If, for example, I had a phone bill sitting on my desk that was due today, I’d pay that and subtract that amount from the $1300 starting figure before going forward.

3. Add the income you are expecting during the remainder of the month.


In our house, the only thing that gets added at this point are checks that we have in-hand that have not been deposited, because neither of us have real jobs. If you have a job, this would be when you add in the checks you’re pretty damn sure you’re going to be getting before the end of the month.

4. Subtract Your Fixed Expenses


I use the AutoSum function (that button that kind of looks like an E) to keep a running total from section to section. I also format my excel sheet so that my negative numbers show up as red text in parenthesis, but that’s just a personal preference. I put each bill’s due date next to the amount because some months you have to know exactly when that $55 is coming out. You know what I mean.

5. Subtract the Variable Expenses


As the name suggests, these are the bills that vary from month to month. I will estimate the number here based on the yearly average or last month’s bill, depending on what’s most appropriate and most likely to be close as hell. I update this with the exact amount as soon as possible (when I get the actual bill.)

The fixed and variable expenses refer to the bills that have to be paid by check or debit card. Once I’ve entered these in, I now know how much cash I have to use for our cash envelopes and any other “discretionary” spending we might want to do.

But first…

6. Put Money into Savings


I’m not a financial guru and 99.99999% of this is not about me telling you how to spend your money. Those decisions should be based on your values. But having money in savings can make such a huge difference in your life. It can help you avoid going deeper into debt. It can prevent you from losing sleep at night worrying about accidents you can’t avoid. It can give you the courage and freedom to take risks and go after the big dream.

But savings accounts aren’t built on “leftover money”. No one has money left over. If you want to build a savings account, you have to make saving a priority. If you decide to save (and I hope that you do), put it in your budget early.

Now you are ready to divvy up your cash.

7. Decide How Cash Will Be Divided into Envelopes

There are classes you can take and systems you can buy that will teach you the details of “the envelope system”. We didn’t take any classes or buy any systems. We just made a list of every expense we could possibly pay for with cash, and wrote the name of that expense on an envelope. MAGIC! WE HAVE A SYSTEM!

Each month, we decide how much money goes into each envelope. When it’s time to buy groceries, we grab the food envelope. If the food envelope is empty and we need food, we have to decide between going hungry or taking from another envelope – and we have to decide what, specifically, we’re going without in order to have groceries. More often than not, we’re able to avoid those situations entirely by being able to see at all times how much cash we have left for each expense.

8. Adjust

You might have noticed that we had $61 unaccounted for in our sample budget. Ideally, you’ll plan for every dollar that’s coming in – which means you can now go back and fiddle with your numbers and decide where you’re going to put that extra money. (I usually leave myself a little cushion every month instead of getting it to zero.) Will you save more? Boost your charitable giving? Add to the remodeling fund? Making this decision now helps you avoid pissing away $61 on double mocha lattes when you could be working towards your {insert personal goal here}.

You might also get through this process and realize you have a negative number at the bottom – it happens. You have to go back and make some tough decisions here. Will you save less? Spend less in gas? Go cheap on groceries or cancel the gym membership? These decisions aren’t fun, but it’s empowering to be able to make them once a month and then live with your envelopes.

9. Adjust Again Next Month

One thing I never understood about budgets before was that they are dynamic, like everything else in life. When you get new money in, you make spending decisions again. We sit down at the beginning of every month and make a brand new budget. We make changes based on things we learned in previous months and what specific events may be on the calendar.

As you go through making and then living with a budget, remember that you have all the power here. You get to decide how you’re spending your money, and you can change your mind at any time. Making a budget doesn’t have to mean subscribing to someone else’s value system or following some guru’s rules. The purpose of a budget is simply to be aware so that you can spend with intent and purpose.

It’s your money, after all. Shouldn’t you know where it’s going?

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  1. Budgets are empowering, and I love what you said about savings. It’s so true. Being self-employed, I had to dip into my savings this year when things went a little pear shaped. Without that cushion we sould have beenin dire straights.

    • Miss Britt says:

      I think people who are self-employed see savings differently than the rest of the world. It’s not a nice “what if”, it’s a necessity for surviving the year.

  2. the muskrat says:

    We’re great at starting these each new year and then stopping doing it. That’ll have to change, though, as we get ready to move (and to write the giant check to the bank at closing)!

    As you know, it’s particularly hard to plan ahead when every earning member of the household is self-employed!

    • Miss Britt says:

      Like you try to do one for the year and then stop? We have to do this every month. I’m not sure how we’d manage without it BECAUSE we’re both self-employed and using the cash system.

      We don’t plan ahead so much as decide how to spend the money we’ve already got. When I did my budget this weekend for May, I used the checks I’d gotten in the mail in April, which were primarily for March work. That was the only way I was able to figure out how to do a budget with our variable (unreliable) incomes and expenses.

  3. does the savings include long term savings…like ira contributions? don’t let folks off the hook without reminding them of the fact that one day they will want to retire and have some money so they need to save for that as well as save for the new roof, vacation, etc.

    i love excel as an easy tool for budgeting.

    • Miss Britt says:

      Heh. Like I said, I’m not financial expert and do not AT ALL feel comfortable telling people how they should save or spend.

      But if anyone asked? We save for retirement before we save for the kids’ college. The kids can get loans and jobs if they want to go to school. You can’t do that for retirement.

      • i love you. serious love.

      • Sheila says:

        That is Mike and I’s thoughts too – we don’t even *have* savings accounts for them for college – if they want to go, it’s on them. Obviously, we’ll help as much as possible but I figure they’ll work harder if it’s their money being pissed away by partying instead of studying.

  4. Sheila says:

    I used to budget all the way down to the penny using a nifty postit note and paper clip system….because I was a single mom trying to manage to buy diapers and pay for daycare while going to school. Once I was out of school and making more money, I started slacking on the budget in a big way and totally screwed myself over.

    When I got married and realized just how important that stupid credit score was, we had to do a lot of hard work to pay stuff off and improve our credit scores. Our budget was an overly anal excel spreadsheet with highlighting and bolding and countdowns for when we’d have each thing paid off. It took us three years but it finally paid off and while at the time it seemed like huge sacrifices (OMG – I have to make my lunch every day?! No cable?!), looking back on it, I wonder why it was so hard for us to adjust.

    Of course, since I’m quitting my job, it really was a huge life lesson, re-learning all the tips, tricks and recipes my mom taught us for feeding a family on a very limited income. It’s amazing how many different ways you can make chicken, beans and rice :) I know that we’ll be able to live on one income because we did that while paying off our debt and saving up for our down payment. We’re also going into this debt free except for the remainder of our car loan and $2,000 in student loans. LifeLessonsFTW

    • Miss Britt says:

      This? Is just the left hand side of our monthly budget sheet.

      I have gotten very good at using formulas and bolds and formatting and every fancy trick available to manage budgeting and planning and saving and.. yeah. I feel ya.

  5. Megan says:

    I working up to making a budget. I have a pretty good handle on where most of our money goes, and I make sure we have forced savings, but I think I’d like to rein in some of our “free” money to put aside for something specific.

    Excellent tutorial. Thank you.

  6. Ren says:

    Very good advice.

    For those interested in some software assistance, a couple of programs that are designed around envelope-type systems are MoneyWell (Mac-only) and YNAB (“You Need A Budget”). I would say the first is more directly an envelope system while the second uses an envelope-type system but has a slightly different philosophy.

  7. Lisa says:

    I recently started doing this too, and I use a similar excel sheet with every expense broken down by the penny. I like what you said about budgeting for savings because I don’t know how it happens but you’re totally right – I really don’t have money for all the shoes I used to buy! It’s definitely been a learning experience, figuring out each and every possible expense and budgeting for that. Except for the bills I pay electronically we’ve gone totally cash based too. (thank you for your help on that!) I wanted to create more awareness of the mindless debit card swiping that had been going on, and it’s really been good for that.

  8. IzzyMom says:

    I was just adding up what I’d spent (only official things like Girl Scouts, Cheerleading, School) in the past ten days JUST for my daughter and I was astounded at the amount. A budget is needed here STAT.

  9. Allyson says:

    Is it just me, or does there seem to be a once-in-a-lifetime-or-otherwise-unusual payment every month/pay period for every one? My list of these includes, but is not limited to, wisdom tooth extraction, state fair, growth spurts that demand new wardrobes, and ER visits. For me, it seems regardless of the type of thing – whether fun or not – is always $200. These are not the types you can plan for, and I always come away from one of them saying, “Yeah we spent money on that, but it’s not a bill. We’ll only have to do that once.” But I make that statement every damn pay period. WTF Does this happen to you too? Is it so consistent like that for you?

  10. Marie says:

    I am so incredibly happy that I Stumbled across this “how to”.
    (long post, bare with me here)

    I have been staying with my parents since my divorce a few years ago, and since that time have not really had to budget money because the rent they charge me is dirt cheap, and I have no other bills to pay. Actually, that is not the complete truth… during my marriage my husband had racked up some bills that were apparently in both our names, because I did not know about them they were not listed in the divorce decree, and now I am stuck paying half. Yes, I literally just found out about these while doing a self-credit check a couple of months back… which literally made me break down.

    Nevertheless, my little family needs to be out on our own again, so my new and much better fellow in my life have been looking around at apartments. Having never had to budget (the ex-husband did all of the financial stuff), I have been trying to get used to it, as well as figuring in all of these “new” collections bills, but have not come across a breakdown as good as this.

    Also I would like to add how much I appreciate the comment about saving for the kids’ college funds. I felt like such a worthless mother because it just did not seem feasible for us and our current financial situation to save up for that. I am currently going to school, and it felt very empowering to get my own loans, and my own grants in order. And yes, whomever said it makes the student/kid more responsible in doing so is absolutely right… I go to class rain or shine, and do everything I can to make it worth it. There is value in responsibility and not being spoon fed everything :)

    Sorry for the long post, but I truly am grateful for your blog.
    I just can’t wait to put this into action when we actually move in July!

    • Miss Britt says:

      I’ve felt like a bad mom for not making sure college was paid for, too.

      But I’m more likely to not have to live with them when I’m old – so, there’s that! :-)

  11. Loukia says:

    I run away when I hear the word budget. I’m in serious debt, and I don’t even want to talk about it. I just want to move back home and have my mommy and daddy pay for everything. WAH! Stop showing this! I don’t want to have to be so responsible! But, thank you. Once again!

    • Miss Britt says:

      I have to be honest – this was MUCH easier to do when we didn’t have a ton of debt. A few years ago before we’d paid our debt off, I would… let’s call it “avoid”… hardcore.

      And also maybe cry.

      A lot.

      But I kind of wish I’d learned this stuff sooner rather than later.

  12. PrincessJenn says:

    We’ve just started using the envelope system too.
    I find it makes you really evaluate what you want to spend your money on when you have a limited amount of cash on hand, rather then the unlimited unknown balance of using a bank card.
    It’s been an eye opening experience.
    But I couldn’t agree with you more… a budget is a must. Essential life skill.

    • Miss Britt says:

      “I find it makes you really evaluate what you want to spend your money on when you have a limited amount of cash on hand, rather then the unlimited unknown balance of using a bank card.”

      YES! It really puts every single purchase in perspective, doesn’t it?

  13. Jazzy Cazy says:

    Oh my goodness, this was so useful. Thank you so much for posting!

  14. mel says:

    Thank you for making it simple. I showed this to Tim and he was all about the envelope system. Especially after we sat down last night and realized we spend $468 at Target alone for the month of April. And even though we went to bed not speaking, I know this is going to help us going forward. Great advice. :)

  15. Bug says:

    I’ve always avoided budgets like the plague…but I like your spreadsheet method so guess what I’m doing today? :)

  16. Hi Britt
    Thanks for the budgeting post. I got a lot out of it. I use a simple excel spreadsheet as well. I do mine slightly differently but I think your budget has more detail so I might give it a whirl instead. You also reminded me I need to factor in PayPal. I often forget to put that in my budget.
    I love what you said about there will be no leftover money. I think some people assume they can save that way but instead they just find themselves in more debt.
    I actually love the envelope idea. I have used it before years ago but it would not hurt to give it another try. Using the envelopes helps in dealing with cash (then you know exactly how much money you are spending).
    Thanks for sharing this with us.

  17. Kitty says:

    This is fantastic! I have always been intimidated at the idea of sitting down and making a budget but you’ve inspired me. Even though I’m just a single girl with relatively few expenses I’ve felt for a long time that I should be being more alert and careful with my spending habits.

    I sat down and crunched some preliminary numbers (not looking to polish down to the cent just yet) and was shocked to find that give or take a little I’ve got according to my income vs. expenses $400 or so extra every month. Where is this money going?! What have I been spending this money on?! I have got some reigning in to do for sure!! Thanks so much for the inspiration and breaking it down so neatly!

  18. Alexandra says:

    I love budgets.

    They remind you that you have decided what to spend your money on.

    Sounds so much better than “I can’t, I don’t have any money.”

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