How to Start a Budget

Hearing the word, “budget” once was intimidating to me. If I heard people talking about their budget I would see a cloud go over my eyes and zone out. The thought of a budget overwhelmed me. I made my very first budget in the Fall of 2011. Even during this time I did not have a clear understanding of the word budget until just a few years ago.

At first we made decision on what we thought we could afford. For example we picked an apartment to rent out based on what we thought was within our budget. Without knowing and understanding you should base how much you spending on housing off a specific percentage you make.

After may trial and errors we have found a system that works pretty well for us. It is not perfect by any means, but it’s a great start. We have learned to manage your money better and understand the value of a dollar.


Before starting a budget, the key factor is that you and those you are budgeting with, are one the same page. A budget can not work if only one is committed to it. A budget will not be successful if one person is cutting lattes to save and the other person sees the extra money in the account and goes out and buys a new TV with the money saved. See my point? But being committed to a budget together will yield great results.

It’s important to remember there are many ways to manage a budget, this particular way works best for us. To see other ideas check out my pinterest board here.

How to Start a Budget:

Budget Template

Our household uses a very simple spreadsheet to keep track of our income and our expenses. We track our budgeted amount for each category, the amount we actual spend, and the due date of the expense.

How to Use Your Free Budget Template

I have added common categories into the template, but these can easily be removed and replaced with ones that fit your family. Categories are the most important part of your budget. Make sure you think about all the expenses you have within one full calendar year. Even if you only have that expense once a year it needs to be on your spreadsheet.

Once you have your categories lined out, now it is time to plug and play.


When budgeting income, it is important to only budget NET INCOME (gross income - taxes & deductions = net income). It is also important to only budget guaranteed income. Do not add annual bonus into your budget or overtime that is not guaranteed. Your budget must be conservative on both sides, income and expenses.


We break down our budget into two expense categories: fixed expenses and variable expenses. Fixed expenses are all of our expenses that never change dollar amounts. Examples: mortgage, insurance, cell phone, internet, etc. Variable Expenses are expenses that change in dollar amount month to month. Even though we try our best to keep these expenses steady they can change. Examples: groceries, gas, gifts, etc.

When budgeting your expenses in your free budget template there is a column for budgeted amount and actual. This will help you see if you are sticking to your budget each month. Our rule of thumb is over estimate budgeted amounts so we are never shy. For example if our Netflix monthly expense is $7.99 we budget $10 not $5 to ensure we will have enough.

Each month you will get closer and closer to dialing in exactly how much you need to budget for each month. In the beginning we ran through our bank account history for 3 months to get an average monthly cost on groceries, gas, entertainment, etc. Once we had an average each month we continuously tried to reduce our expenses.

For awhile we were hitting a roadblock and were not able to reduce our expenses until we implemented our Cash Envelope System. This system is what took our expenses reducing to the next level. Stayed tuned for that up coming post by making sure to follow us on our Facebook Here


I believe savings is one of the most important parts of a budget and that is why you will see in our free budget template that it has its own section. I have listed a few specific categories that fit our family needs, but if you need change some out and/or add others, feel free to do so.

We set money aside every month for home maintenance, vehicle maintenance, retirement, and for long term savings. Long term savings can and will differ for each household. Our long term savings is for emergencies: car needs to be replaced, savings for a new home, etc. Those larger expenses that take years to save up for.

Spend time discussing with your significant other the financial goals you want to set aside for in your long term savings.

Financial Goals

I can not stress to you enough how important it is to discuss finances with your significant other and family. By being able to have honest conversations about your current budget and what you want your future budget to look like is important.

Take time to vision yourself in 5, 10, 20 years and start putting those dreams in your budget. By doing that today you are ensuring you will see those dreams come true in the future. Set goals with each other in the beginning of the year and have monthly check in meetings to make sure you are staying on track to meet the goals you set for the year.

Reviewing Budget

Reviewing your budget with your significant other once a week is a great idea. We sit down every Sunday to talk about our finances and to make sure we are on budget for the week and month. And once a month at the end of the month we talk about the expenses coming up that next month. This is also the time we talk about our Financial Goals. This makes it so we are both are on the same page at the beginning of each month.

Your turn!

Now it’s your time to implement your new budget. Schedule a time with your significant other or family to sit down to discuss and set up your budget and financial goals. Make sure to comment below with any questions. I am very happy to assist you with start your budget.