Whether you’ve never budgeted or are wanting to improve your budgeting skills, here you will learn how to create a budget and implement it, plus you can get a free budget worksheet.

Learning how to budget can be overwhelming, but it doesn’t need to be.

A budget will help you be in control of your money and choose where you want to spend it. It also helps you become more aware of where you are spending your money.

Once you learn how to create a budget, as well as some basic budgeting principles, then you’ll be able to save money and start seeing a difference in your finances.

Before learning how to create a budget, be sure to first print off the FREE budget worksheet (sign up below to get it), and fill it out while you walk through the budgeting principles below. 

I put together a video of how to use the free budget worksheet and also talk about the basics to budgeting. Watch the video above or click the link here to view it on my YouTube channel.

What are the Steps to Creating a Budget?

Here is how to create a budget and also use the free budget template printable worksheet.

1. Set Financial Goals

Since you are reading this, you are most likely motivated to start budgeting.

Before you start your budget, determine what is motivating you to do this and then set some financial goals. Are you wanting to get out of debt or save up a down payment for a home? Do you want to stop living paycheck to paycheck or save for a big family vacation?

Whatever your motivation is, you need to keep these financial goals in mind as you are budgeting each month. Write these goals down because they will help keep you on track and focused each month.

It’s also important that you have financial goals with specific numbers. For instance, how much money are you wanting to save each month? Which debt will you pay off first and how much money can you afford to put toward it each month?

Make sure these goals are realistic and achievable. You may not be able to save $500 a month, but maybe you can save $200 a month.

In order to save $200, that would mean setting aside $50 a week. In order to save $50 every week, some things you could do is don’t eat out, cut your grocery bill down, don’t go to the convenience store to grab a drink, or cut out subscription services.

It’s the small changes that make a difference over time.

Once you’ve determined what your financial goals are and printed off the free budget worksheet, then the next step is how to start budgeting.

2. Determine Income and Expenses

First, add up all of your sources of income and determine how much money you have coming in every month. This includes day jobs, night jobs and side jobs.

Add this to the top of the free budget worksheet template.

Now under the expenses section, divvy up and allocate how much money should go to each expense budget category.

Start by listing the expenses that are “needs”. This includes mortgage/rent, utilities, food/groceries, and transportation. Write down when these expenses are due so you pay them on time, and write under the “budgeted amount” column how much money will go toward each expense.

An example of the budget worksheet might look something like the one below. This is just an example. Tailor the budget worksheet to fit your income and expenses. Grab the free budget worksheet above.

Click here to open the example budget worksheet in a PDF format. 

Once you’ve written down your “needs” expenses, then continue to write down other expenses from more important to less important. Additional expense categories could include debt, insurance, medical, eating out, clothing, pet, holidays, birthdays, charitable giving, savings, etc.

If you are unsure of how much to budget next to each expense, it will be helpful if you take time to analyze your spending and figure out where your money is being spent. Look at your bank statement to see which categories are taking the most of your income. By looking at this, you’ll be able to budget about how much you spend in each expense category. And by seeing where your money is going, you’ll also be more mindful of your spending.

It’s also important to budget realistic amounts for each expense category and stick to the budget. Remember that if the money runs out, then you can’t spend more on that category until the next month.

At the bottom of the “Budgeted Amount” column, the total expenses should equal your total income. Meaning all of your income money is accounted for and allocated to a budget category. This is called a zero-based budget when you tell every dollar where it needs to go.

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Whether you are starting a New Year’s resolution to get in a better financial position or continuing to work toward your financial goals, you’ll want to use a budget app to help you with your finances. Budget apps are a great tool for managing your money, sticking to a budget and reviewing your spending habits to identify where money might be wasted. If you are like most people, you have your phone with you almost every where you go, which makes it easy in this digital age to have control of your finances at your fingertips if you have a budget app on your phone.

Here are 9 budget apps (most of which are free to use) to help you keep track of your money so you can get a better handle on your finances and put yourself in a better financial position this year.

1 – Mint

Mint takes the hassle out of creating a budget. It helps you manage your spending, saving and earnings, and can even sync to all your accounts including your bank and credit card accounts, 401(k), IRA and savings accounts, as well as all your monthly bills, so all your finances are in one convenient place. Mint lets you know when bills are due, what you owe and what you can pay. The app can also send you payment reminders so you can avoid late fees. Mint gives you a big picture view of your financial situation. It shows you all the recent transactions you’ve made, how you’ve been using your accounts, your account totals, monthly budget, credit score, spending organized by category, and even alerts for when you go over budget. The Mint app is free to use.

2 – EveryDollar

EveryDollar was created by personal finance guru Dave Ramsey. The app helps you create a monthly budget and more easily facilitate the Dave Ramsey’s baby steps budgeting. I’ve read Dave Ramsey’s Total Money Makeover book about the seven baby steps and it’s one that everyone should read to stay motivated on your journey to financial freedom. EveryDollar is based on the envelope method and the principle of giving every single dollar a job. The app starts you with eight main budgeting categories that include the following: Giving, Savings, Housing, Transportation, Food, Lifestyle, Insurance & Tax, and Debt. You can add more categories to tailor it to your budget needs. Then you assign available funds for each category, and as transactions are entered, the amount is deducted from the appropriate category. The EveryDollar basic version of the app is free.

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