When your budget fails, it doesn’t mean that you’ve failed. This guide on how to make a budget will help you pick the right strategies and set goals that make sense for you.

You’ve probably noticed that most financial sites, books, and pros offer the same piece of advice to everyone looking to get their financial health in order: start a budget.

There’s a reason for this. Like it or not, budgeting works. But sometimes, actually sticking to a budget feels impossible.

The first step to budgeting is actually knowing how to make a budget. We’re going to take you through this process step-by-step until you feel excited to get started.

Why most budgets fail

We’ve all failed on our budget. Cars unexpectedly break down, nights out happen, and life throws you curveballs you can’t afford. But these aren’t the reasons budgets fail.

Budgets tend to fail for two reasons:

  • They don’t track spending habits accurately
  • They lack well-defined, attainable goals

In other words, if your budget isn’t accurate and it doesn’t feel important to you, it’s not going to work.

Keep reading for detailed instructions to make a budget you can stick to.

Step 1: Choose a budgeting method

Luckily for anyone who’s ever had trouble budgeting before, there are hundreds of different budgeting methods out there. From apps to journals to simple spreadsheets, there’s a method out there for you. Here are a few of the best ones for beginners.


If you’re relatively financially stable with a steady income and predictable bills, this budget is for you.

The 50/30/20 budgeting method is simple. You spend:

  • 50% of your income on living expenses (including fixed monthly expenses like car payments, rent, and mortgage payments as well as variable expenses like groceries and gas)
  • 30% of your income on wants and lifestyle choices (fun, entertainment, dining out, etc.)
  • 20% of your income toward debt repayment and saving (like your emergency fund)

If you don’t have a regular inflow of cash, this system can be tricky to execute. This is why we recommend this method for steady earners.

Any of these budget categories can change depending on a variety of factors. For example, if you have $100,000 in student loans, a car loan, medical bills, and a couple of credit cards, you’ll end up using more than 20% of your income to pay off debtAnd if you make a low starting salary and live in New York City (or any major city, for the most part) you’ll probably spend more than 50% of your income on living expenses.

If you want to use this method, adjust the percentages as needed to make them work for you.

Read more: Why you’re living above your means — and you don’t even know it


Using a spreadsheet can help you track your spending and stay on top of your money. And we’ve got a great one that’s free to use.

Our spending plan template includes categories for all your monthly expenses from your regular bills to your debt payments and the ways you want to spend money. It follows the 50/30/20 budgeting method we just mentioned but does all of the work of calculating how much you can spend in each budget category and subtracting expenses as you add them.

Using your actual income, specifically your net income after taxes, it breaks your spending down into needs, wants, and financial goals. You input all your expenses and payments and let the spreadsheet do the rest.

Click the link below to get our budget spreadsheet.

Read more: Free monthly budget template for Google Sheets

Bullet journaling

Bullet journal budgeting is a form of pencil-and-paper budgeting that can be especially useful for keeping your spending under control.

When you actively participate in your budget and can see it written and drawn out in front of you, you might be more apt to stick with it.

With a bullet journal, you manually record every time you spend money. This can be tedious, but it’s worth it. It helps you see exactly where your money goes, leaving no room for guesses, and may be ideal for you if your biggest problem with budgeting is discipline.


Technology can be a big help when you’re getting started with a budget. There are plenty of great budgeting apps out there for any type of method or system you’re looking for, so you can sample a couple of strategies until you find one that clicks. Here are some of our favorites and what sets them apart.

You Need a Budget (YNAB) — This budgeting app uses a zero-based budgeting system, which means that every dollar of your monthly income has a purpose in your personal budget whether that’s spending, saving, or something else. It lets you link your bank account so you don’t have to manually add transactions. YNAB is ideal for proactive, hands-on budgeting and saving money.

Empower — This money management app goes beyond budgeting. You can also use it to track your net worth, monitor your investment portfolio, plan for retirement, and more. Tools like a Monthly Budget Calculator can help you organize your variable and fixed expenses so you can make room for your financial goals.

(Personal Capital is now Empower)

Step 2: Track your spending

One of the reasons most of us can never stick to a budget is that we like to believe we’re better at controlling our money than we really are. In other words, we underestimate how much we spend. To make a budget, you need to start by tracking your money for a month. This will show you how you really spend money.

Recurring expenses like rent, insurance, and internet are fairly easy to budget for, but variable and unexpected expenses are more difficult to track. You can record most of these by reviewing your credit card statements and bank statements.

If you don’t like what you find and discover that you’re overspending, take some small steps now. See how little you can actually spend on food and not go crazy eating pasta every night. Figure out what expenses you can cut — can you live without Netflix? With a lower-cost phone place? Can you take public transportation instead of your car? You get the picture.

Read more: How to save money fast

Step 3: Write your budget

Since you took a month to see how much you really spend, you should be in a good place to sit down and write your budget or plug some numbers into an app.

Record your income

If you have a steady income, here’s how to figure out how much you really make and what number to use for your earnings.

  • If you get paid every other week, multiply your paycheck by 2.166 to determine your monthly income
  • If you get paid weekly, multiply your paycheck by 4.333

If you’re budgeting on a variable income, follow these steps.

  • Open another savings account for money that covers irregular expenses and put in the same amount each month
  • Pay yourself every two weeks or monthly if you can to give yourself a somewhat regular income

Record your expenses

It’s best to overestimate your expenses to give yourself some wiggle room. Create categories that never change for fixed expenses and don’t forget to include variable expenses like savings, dining out, and emergencies and repairs.

Think about your weekly, monthly, and annual expenses. The more specific you get and farther out in the year you think (e.g. Christmas gifts and car registration), the better.

Use the same method to pay your bills each month

You may use an app, credit card, debit card, or another method to pay your bills. It depends on what you’re comfortable with and what you’re most likely to remember. For most payment methods, you can enable automatic payments to make sure you don’t miss a payment and save money on late fees.

Step 4: Follow your budget (and make a goal)

Obviously, none of this matters if you don’t actually follow your budget. But to stay motivated, you need to set goals. Think about your bigger financial picture: what could you do with the extra money you’ll have when you get your spending under control?

Are you saving for a house downpayment? Hoping to buy a car? Working on getting out of debt? Make sure your goal is important to you. That will help you stick to your budget.

Read more: Budgeting in your 20s: Why and how to get started

Step 5: Adjust for real life

No matter how good you are at sticking to a budget, if an unexpected expense arises and you don’t have any savings, you’ll run into trouble. There are a few ways to incorporate unexpected expenses or income into your budget.

Our number one piece of advice is to create an emergency fund — a separate savings system you only use for emergencies. If you’re living paycheck to paycheck, that can be hard to do. But if you save something, no matter how little, you’re on the right track.

If you need help saving, try a money-saving app that’ll put away a little money for you. Spare change apps like Acorns round up your purchases to the nearest dollar and deposit the extra in your savings account.

Step 6: Keep trying

Budgeting isn’t easy for anybody. It takes practice and hard work. And to be honest, sometimes you need to fail a few times before it starts working.

Just because one budgeting method doesn’t work out for you doesn’t mean budgeting isn’t for you. There’s a method out there for everyone and you just might need to try a bunch out before one sticks.

If you’re new to budgeting, try to be as consistent as possible with whatever strategy or tool you’re using and give each one a fair chance before you move on to the next. For example, if you’re trying zero-based budgeting and feel like it’s not a good fit, give it a few weeks before moving on to other budgeting methods.

Another important thing to point out is that you’re allowed to change your budget. And you should! If you start to earn more (or less) money, adjust your budget. If you get a windfall from your taxes or a holiday bonus, add that to your budget for the next month.


Sticking to a budget is hard, but it’s also one of the single most important habits to keep if you want to manage your money well.

There are methods and tools out there for everyone and apps and spreadsheets to support you. With so many options, there’s no reason you can’t find a budget that works for you.

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About the author

Total Articles: 103
Christopher Murray is a professional personal finance and sustainability writer who enjoys writing about everything from budgeting to unique investing options like SRI and cryptocurrency. He also focuses on how sustainability is the best savings tool around. You can find his work on sites like MoneyGeek, Money Under 30, Investor Junkie, MoneyCrashers, and Time. You can find out more about Christopher on his website or via LinkedIn.