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How to do a monthly budget that you can actually stick to

Uppdaterat: 19 mars 2020

Photo by Plush Design Studio on Unsplash
Photo by Plush Design Studio on Unsplash

Doing a budget can seem daunting if you haven't done it before. Or maybe you have already tried it a few times but couldn't manage to stick to it which made you feel bad because of that. In the beginning of my personal finance "career" I also made budgets that I couldn't stick to but the last couple of years I have been budgeting effortlessly thanks to some small tweaks.

Here are 10 steps to do a monthly budget that you can actually stick to.

1. Take a blank piece of paper or an empty spreadsheet (e.g. google sheets) and add the month + year at the top. E.g. June 2020. Then you write "INCOME" and list your salary, gifts, selling on ebay and other incoming money sources. Write out the total of these amounts. (If you are using a pen and paper you will need to be ready to erase and update a lot)

2. Once you have the date and the income section, its time to add the "OUTGOING" section.

Here you can write a basic list of categories that seem to fit the type of expenses you have every month. You can find these lists by googling/check pinterest for "expense tracking categories". Copy, add & remove categories until you have a first draft list. The key here is DRAFT. The first budget you do will change over time but that is completely normal and good. Now you can create a space where you can sum up the total of all the outgoing amounts.

3. At the end of the document, you will now add a "Difference" or similar section. This is where you take the total incoming minus the total outgoing. This will show you if you overspend or underspend each month. Meaning if you have something left over or if you are going into minus. (with a 0 dollar budget you will aim for 0 here)

4. At the very top of the outgoing section you can now add a category for "savings" or "money freedom" or similar. Here you add an amount that you will save each month for long term savings, emergency fund, Christmas, vacation etc. (these are your money buckets, separate blog post coming up).

5. When you have your savings included in your budget, you will want to aim for a 0 dollar amount at the difference section. Meaning that when you have all the incoming money allocated to different things, there is 0 dollar left. This is how you tell your money where to go which gives amazing control of your money and the chance to start building wealth.

6. Now the main structure for your budget is complete, the only thing missing are your numbers. This is the second secret to creating a budget that you actually stick to: use real numbers from last month, not what you wish to spend next month. I have made budgets so many times that are based on how I would like to spend, which is almost nothing but that is not realistic. So it is a lot better to use actual numbers from last month and this will also inspire you to improve! and help you stick with the budget.

7. So how do you use "real" numbers from last month? Well, there is no getting around it: you need to write down EVERY SINGLE purchase that you do. Every day, like forever. Haha maybe not forever but at least 3 months. One month to get into it (because you will forget to do it a lot in the beginning), and then 2 months to track your spending. You can use a simple, small notebook + pen OR any personal finance app that lets you save expenses (date, what it is & the amount).

8. Make sure to find all your sources for outgoing money, not only cash expenses. Check your credit card statement, invoices, direct debit, subscriptions etc. Add it all in under "outgoing". This is a pain for like a few days and the benefits are disproportionately awesome when you will be rolling in money a few years down the road.

9. The mindset trick to be able to track all your purchases (and stick to it) is to enter them into your budget EVERY night. That way you don't have a mountain of mess/receipts/notes etc. at the end of the month that feels impossibly boring and complicated to do. If you do it every night you will be amazed at how easy it feels like. It will take you between zero and 5 minutes each night.

10. This is basically how your document should look like now:

June 2020

Incoming money:

- salary

- ebay

- etc.

Total: XXXX

Outgoing money:

- savings (freedom, Christmas, etc.)

- rent

- grocieries

- bus

- phone

- insurance


Total: XXXX

Difference: XXXX (aim for 0 here)

The following month is the same thing, repeat and tweak, make changes and repeat again.

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