How to Make a Simple Monthly Budget That Will Save You Money
I opened up my budgeting spreadsheet and clicked through the tabs. Only two were filled out. Month after month had gone by and I hadn’t recorded a single expense.
I sighed. I guess I’d have to do better next year.
Sometimes I wonder how people used to live with checkbooks. How did they meticulously record every check and balance their checkbook on a regular basis? How did they find the time that I never seem to?
If you’ve read my post on 15-Minute Meal Planning for Busy Moms, you know that I’m always looking for an easy way to do everything. So I set out to find out how to make a simple monthly budget that was maintainable, so you can too.
How to Make a Simple Monthly Budget That Will Save You Money
The First Question
Before you set up your budget you need to consider how you spend most of your time. Do you have time to sit at a computer or work on your phone regularly? Do you have space and the hands to carry a physical budget book, binder, or cash envelopes?
Decide what will work best for you and don’t be afraid to try different options. Start with my free simple budgeting sheets and go from there. If the documents don’t work for you, maybe a digital option would be better.
The Digital Option
My favorite online budgeting tool is Mint.com. I’ve tried others and even paid for some. I still come back to Mint. You can set up your budget and categorize purchases.
One of my favorite tools is the goal tracker. You can set a goal and see your progress.
The Physical Option
I’ve been through a lot of physical budget planners. I’ve done envelope systems, simple envelope systems, and a number of budget binders over the years. I tend to start them and then forget about them.
I created some budget sheets for you to use to get started. If those work great for you, a physical budget is your better option.
So choose your method and let’s get started.
Why Should I Budget?
A lot of people are afraid of budgets because they sound restrictive. But a budget is a tool that helps you spend money where you want to and not where you don’t.
There’s no right or wrong way to budget. You just have to figure out what works for you and your family.
What Should I Budget For?
Again, this is going to be specific to you and your family, but here is what I would suggest.
Start off with your monthly fixed expenses.
- Mortgage/Rent
- Electricity/Gas
- Water/Trash
- Phone/Internet
- Car Payment*
- Car Insurance
- Childcare*
- Health Insurance*
- Tithes/Giving*
Next add your spending expenses.
- Groceries/Eating Out
- Gas
- Health Expenses (co-pays, vitamins, medication)
- Home Care* (new sheets, new towels, plants, basic items required for homes at times)
- Entertainment* (streaming, subscriptions, events, hosting, recreation, gifts)
- Hobbies* (supplies needed for hobbies or anything you do that requires a cost)
- Personal Spending (for each person in your family)
You can break these categories down even further. I like to keep personal spending fairly general.
Next add savings needs.
- Auto Maintenance
- Car Replacement*
- Christmas Savings
- Education Savings*
*Optional categories
How Much Should I Budget?
The amount that you budget in each category is up to you. Work through them in the listed order. Start with your fixed expenses and use what’s left to fill in the other categories.
For example, if you bring in $5,000 a month. But you have fixed expenses that total $3,000. You have $2,000 to fill in your spending expenses. If those total $1,800. You only have $200 left to go towards savings.
Often what happens is we use all of our money for bills and spending and never get to saving. When the savings are needed, we go into debt to cover them. That leaves us in a constant cycle of debt and financial stress.
It’s important to find ways to save for those upcoming expenses. Once you can get ahead by saving, you eliminate the extra cost of financing. And your money does more for you in the long run.
Balancing the Checkbook
Unfortunately, your budget isn’t going to be maintained unless you maintain it. You can set up a budget, have goals, and create fancy spreadsheets to track everything. But if you don’t track your expenses, you’ll be no better off than you were when you started.
Set a weekly time to balance your budget.
Put it on the calendar.
If you’re married, do this together. It’s not only good for your finances but for your marriage. A CNBC news report based on a financial study on married couples concluded:
“Couples who openly talk about money are more likely to be on the same page and are better able to achieve their financial goals.”
Emily Garbinsky
Set aside 20 minutes a week to look at what you’ve spent in each category. This helps get you on track for the next week.
If you know you’ve spent way more than your weekly allowance on groceries, you can come up with a plan to cut costs in the next week. If you don’t know, you can’t adjust your spending.
An Alternative
If you know you absolutely don’t have time to track your spending or you know you won’t. You can try cutting down your categories and opening accounts funded specifically for each type of spending.
You might have a debit card for groceries, your spending, and your kids’ spending. Each month you can fund that account with the budgeted amount. Once the money’s gone, you’re done spending.
Alternatively, your husband might have a debit card for entertainment, eating out, and his spending.
The Downsides
With this alternative method, you don’t get a detailed look at what you’re spending money on. Say you’re overspending on home decor. You would never know because it’s all lumped into one spending account.
You also take the power of the spouse out of your finances.
When I was single, I spent a lot more money on myself than I do now. Now I that I know I’ll have to explain that $200 pair of jeans to my husband, I don’t buy them.
Overdrafts fees. If you really struggle with overspending this might be a terrible idea for you. If you don’t check your account often, you might incur overdraft fees. Or you might grab a credit card as soon as you run out of money. (Budgeting is kind of counterproductive in that case.)
But this is a great option if you need a budget but don’t have time to keep up with it.
What About the Leftovers?
Decide what you’ll do with leftover money in each category. Do you want to roll it over into next month?
Do you want to save it for a big family reward?
It might be different for each category.
Because Budgeting is Hard
Find a way to celebrate your wins each month. Take a day off and find something fun and cheap to do. Go out to dinner if you have money left in your budget. Take some extra money and set it aside for something you want–maybe a vacation.
Celebrate small wins because budgeting is hard. It’s easy to get discouraged and give up.
Use the savings/debt tracker in my budgeting package for a visual way to track your savings or debt payoff. Put it on your fridge so you don’t lose sight of your goal.
Ready, Set, Get Budgeting
- Set up your budget
- Track your spending OR set up accounts to budget for you
- Set your weekly meeting time
- Decide what you’ll do with leftover money
- Fill out the savings/debt tracker and make it visual
- Celebrate your wins each month
- Repeat
Now that you have a strategy for how to make a simple monthly budget and maintain it, you can start your budget and track expenses. I know you can do it (after all, your parents used to balance checkbooks). Celebrate your wins each month. And keep going.
