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Every Dollar Counts…

Do you often get to the end of the month and wonder where all of your money went? You find that you are constantly scrimping and saving, but never seem to get ahead on your personal finances?

Before i started budgeting, I would constantly ask myself these questions. We couldn’t seem to get a grasp on where our money was going month after month.

I was busy and kept putting it off because I was doing alright. I wasn’t saving much, but at least I was saving. Right? Wrong.

The money that you earn is YOUR money. You spent time working hard for that money. That is time you won’t get back. Part of your life that you’ve lost forever.

How you spend your money says a lot about how you want to live your life.

If you’re okay with sleepwalking through life, never really having lived, then by all means leave this post and don’t worry about creating a simple monthly budget and getting your personal finances in order.

If you have goals or dreams that you hope to achieve in life, you need to start being intentional with your finances.

You need to take action and get your personal finances in order today. See below how to create a simple monthly household budget in 4 easy steps.

1. Write Down Your Total Income for the Month

This is how much you make from all of your sources of income. If you’re married this is how much both of your make combined.

This includes full-time jobs, second jobs, freelance pay, businesses, rental property, Social Security checks, and any other ongoing sources of income.

If you’re pay fluctuates throughout the year, make an assumption based off of what you’ve made in the past.

I would err on the conservative side, so that if you do make less than estimated, you can still cover your expenses.

2. List All of Your Expenses

This includes your regular bills (mortgage, electric, water, sewer, cable, internet, trash, phone, etc.) and irregular bills (car insurance, house insurance, home owner’s association, etc.) that are due the following month.

Next, include your other costs such as retirement contribution, food, gas, entertainment, clothes, etc.

3. Subtract Your Expenses from Your Income

If your expenses are greater than your income then you need to go back and look at what expenses can be reduced or removed for the budget.

Regular bills such as cable, internet, or phone and other costs such as eating out, retirement, entertainment may not be a necessity until you get on your financial feet.

If you end up with more income than expenses, you need to tell that extra money where to go.

Tell Extra Money Where to Go

If you don’t already have a small emergency fund, I recommend saving this extra money until you have one.

The amount depends on you, but somewhere in the range of $500 – $2000 should do the trick. This should be enough to handle any small emergencies that pop up such as vehicle or appliance problems.

If you do have a small emergency fund and your employer offers some kind of match on a 401k or similar retirement program, I would put the extra income into this in order to get the “free money” being offered by your employer.

If you do have a small emergency fund and there isn’t any kind of special retirement match with your employer, I would next start paying down debt. Pay down the debt with the highest interest rate first making minimum payments on all other debt.

Are you debt free? Congratulations! I would recommend you devote all of your extra money towards retirement.

Once your income and expenses balance out to zero, you are done. This means you have told every dollar what to do. This is what it is to be intentional with your money.

4. Track your Expenses and Stay on Budget

This is the hardest part. You will need to stay on top of your expenses. There are multiple ways to do this.

You can use the envelope method where you place cash for each budget item in an envelop and use them throughout the month. The beauty of this technique is that it is very simple and, as long as you plan accordingly, takes very little effort to implement.

You can keep a personal ledger either using excel or a monthly budget planner. You simply keep all of your receipts throughout the month and log them in daily to keep track of your budget. In my opinion, this is time consuming and a little unwieldy now that we have budget tracking software.

Free Budget Worksheet Sources

Consumer.gov – Make a Budget – Worksheet

Microsoft Office Templates (For Office 365 Subscribers) – Budgets

Google Drive – Once you’re logged in, drop down under My Drive -> Google Sheets -> From a Template

Mint – Free Budget Templates (they keep the files in the body of the post for each template)

Budget Tracking Software

You can use a budget tracking software such as You Need a Budget (YNAB) or Mint. YNAB relies on you either typing or uploading excel sheets to update your expenses.

Mint asks for your login information and pulls the information for you. If all depends on who you feel comfortable using.

YNAB requires an annual subscription (they are currently offering a free month; then $89 a year).

Mint is free, but more intrusive. I personally use Mint to track my expenses and can say in the 5+ years of using them, I have never had any issues. Occasionally you will need to update a password, but other than that, no problems.

That’s it. 4 easy steps to create a simple monthly household budget. As long as you’re consistent and continue to keep a budget, you are well on your way to getting your finances straight.

Do you currently follow a budget? What budget tracking method do you use? How have you done since you started following a budget?

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