How to Build a Budget in 4 Easy Steps

So maybe you have been wanting to create a budget because you know how important it is to track your spending, but maybe you haven’t because budgeting seems difficult and scary. But it actually can be quite easy. If you have been wondering about how to build a budget, then keep reading to figure out how it can be done in four easy steps.

Related: A Master List of Budget Categories

How to Build a Budget in 4 Easy Steps

1. Determine Your Income

How to Build a Budget in 4 Easy Steps - Money in Wallet

You need to first determine how much money you have coming in. So, pull out your paycheck stubs or look at the amount that is being pulled into your bank account by direct deposit.

Don’t forget to include any other income. A second job. Alimony and/or child support. A side hustle.

Decide how you are going to keep track of your budget. You can use an app that will help you track everything. Or you can go old-school and use a good old fashioned pencil and paper. (I personally like this method, but make sure your handwriting is legible.)

Or you could use a combo of the two. But whatever you use, make sure it works for you and doesn’t confuse or frustrate you. Now that you know how much income you are dealing with, now you can review where it is going.

2. Figure Out Expenses

How to Build a Budget in 4 Easy Steps - Two Paper Bags Full of Groceries

Next, you need to list out all of your expenses. Categories you could budget for include:

  • Mortgage or Rent Payment
  • Utilities
  • Transportation
    • Car Payment
    • Maintenance
  • Groceries
  • Clothing (For everyone in your family)
  • Child Care
  • Entertainment/Fun
  • Pet Costs

Now it is important to note that you may have expenses that aren’t a monthly occurrence, but they still show up. Make sure to account for these as well, so they don’t sneak up on you, and you are caught off-guard by them.

Related: A Master List of Budget Categories

3. Calculate the Difference

How to Build a Budget in 4 Easy Steps - Calculator

The trick with a budget is to get your expenses to be lower than your monthly income. If you find when you are building your budget, that your expenses are higher than your income you have two options. And it is perfectly valid to take advantage of both options.

1. Spend Less

Look back at the budget you just created and figure out what can be reduced. Are you spending too much on your groceries every month? Can you buy fewer clothes? Is it possible to make your own coffee instead of buying it?

Related:  The Quickest Ways to Save Money at the Grocery Store

2. Make More Money

There are plenty of opportunities to make more money online or offline. You could get a part-time job. You could start a blog. You could become involved in affiliate marketing. You could sell your crafty items on Etsy. You could resell items on eBay. 

4. Track Your Spending and Make it a Habit

How to Build a Budget in 4 Easy Steps - List

Now you don’t want to just set your budget and forget it. Because then you probably won’t stick with it. When you are first starting to create your budget it is important to review every week, so that you can see where you are succeeding, where you might need to save money, and what needs to change. Every month, reevaluate your budget, see where adjustments need to be made.

Final Thoughts

Building a budget doesn’t have to be hard or scary. It is actually quite simple if you follow these four easy steps.

2 thoughts on “How to Build a Budget in 4 Easy Steps”

  1. You did a great job ! I believe that this is the information that can’t be find on the web easily and you decided to share it with others for free, that’s really great!

    I didn’t know much about building a budget but I’ve been always interested to know more about this topic and your comprehensive guide helped me a lot. I don’t know if you wrote this post 100% by yourself or got help from other sources as well, anyway, it has really brilliant information which convinced me to share it with my friends on social networks.

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    • Oh, you are too kind, Ali, thank you so much. Thank you for sharing my post on your social networks. I am glad that my post could help you and give you the tools and information you were looking for.


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