That’s how many Americans live paycheck to paycheck, according to a recent survey by Charles Schwab.

Living that way means you’ve got nothing to put towards all your bigger financial goals, like getting out of debt, saving for retirement, or building up a down payment for a house of your own.

If you’ve had enough and want to reallocate your money to the priorities you really want to tackle, learning how to budget is definitely the way to go.

In this post, you will learn:

  • Why is budgeting so hard
  • How to create a monthly budget calendar that works
  • How to set spending limits for your expenses and fun money


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how to make a monthly budget you will actually follow


Prefer video? Check this post out on Youtube:

Budgets are kinda like brown rice: you know it’s good for you, but doesn’t mean you like it.
For most people, budgeting means spreadsheets that feel like such a chore, irritating restrictions that are a struggle to stick to, and a lot of work for something that usually results in more frustration than it does savings.
With our budgeting system, we’re gonna scratch all of that and show you a way to budget that will actually stick and help you save money.


  • Simple walkthrough - just one sheet!
  • Divide income into 3 categories: needs, wants, and savings
  • Bonus expense tracker 
  • Form fillable!

simple budget worksheet with expense tracker

calculate on notepad

How to create a monthly budget calendar: Key steps in the budgeting process

Step 1: Track your expenses first
What sets apart a good budget from a bad one is that the best budgets use realistic spending limits you can actually stay within. Figuring out those limits is way easier to do if you know what you actually pay for and how much you spend on each of those things.

That’s why you should always start your budgeting journey off by tracking your expenses first. Do that for a minimum of three months before you move on to creating your actual budget.


Need a step-by-step tutorial on how to track your expenses? Check out our expense tracking post or YouTube video.

blank monthly calendar

Step 2: Grab a blank calendar to create your budget on
Most budgets are done by spreadsheet, but we prefer to use a calendar for several reasons:

  • Spreadsheets are so formal and feel kind of stifling
  • Calendars are just much easier to read and use than spreadsheets are
  • Knowing when and how often you spend is way more helpful for understanding and changing your behavior
Use a calendar to create your budget so that by the time you’re done with these steps, you’ll end up with an easy-to-follow tool that you can use as a daily spending guide to take some of the headache and discipline out of managing your money.

budget sample plan income only
Here’s a sample budget with only the income listed

Step 3: Enter your income
Fill in when you expect to get paid and how much you should be receiving each paycheck. Since we’ll later be adding our expenses to this same calendar, we like to make the income stand out by using a different color, like red or green.
If you’re a salaried workerYour income is usually pretty predictable, so filling in your income should be super easy.
If your pay does vary a little bitUse your best judgment and write down the minimum amount you think you’re likely to receive.
If your pay varies greatly
(ex: you work mainly for tips or commissions)
You may have to do a little extra homework to get plausible numbers for your budget.

During your initial three months of expense tracking, mark down your exact income in addition to keeping tabs on your expenses.

Knowing your exact pay for the last three months should help you come up with an educated guess when it comes time to do your budget calendar.

When in doubt, always use the more conservative figure when estimating your income.


If you have any other consistent & regular money coming in, such as social security payments, you can also include that in your budget, but only if it’s money you can pretty much always count on.

budget sample plan with income and expenses
Sample budget with income and expenses listed

Step 4: Enter your essential expenses
This is the part where most budgets fail: when people try to predict their spending.

We’re pretty terrible at remembering our actual expenses, and we usually spend way more than we think we do.

And because our memories have got it all wrong, people often set their spending limits way too low to be realistic, and end up going through their budgeted amounts much faster than they thought they would.

That’s exactly why we had you start off with tracking your expenses, because you should base your budget on what you actually spend, not what you think you spend.

Going back through all three months that you tracked, you’re gonna look through every single expense and account for it on your budget, if it makes sense to.

As you go through each transaction, you’ll want to consider these three key questions:

blank monthly calendarIs this an expense I have every month?
counter at 2How often do I have this expense each month?
dollar billHow much do I spend each time I have this expense?
We know this may sound like a lot of work, but we promise, it’s not that bad once you get started. Let’s go through a few examples so you can see how it’s done.

The first essentials category is housing & utilities, so we’ll only focus on those for now. The first expense we have within this category is electricity. Going through the three key questions, let’s say your expense tracking calendars reveal this:

monthly budget utilities category

Is this an expense I have every month?YES
How often do I have this expense each month?1X PER MONTH

How much do I spend each time I have this expense?

$100 TO $150 PER MONTH
Because it’s an expense you do pay at least once a month, that’s how you know it needs to go on your budget. You only need one entry, since you only pay this expense once per month. And, you have a good idea of how much the expense actually costs you, thanks to the expense tracking you did.
Make the entry for your electricity bill in your budget calendar on or around the date you usually pay it. For the dollar amount, go conservative and use the highest of the three months, unless there’s an obvious explanation why any of the months were exceptionally high and you know it shouldn’t happen again.
Continue filling out your budget calendar with the rest of your housing & utilities expenses.


On your original expense tracking calendars, cross out each expense as you address them on your budget, just to make sure you don’t miss or duplicate anything on accident.

As you do this, you’ll slowly come to realize that budgeting isn’t an exact science.
There will be instances where you have to use your best judgment to come up with the date and dollar amount to fill in for your budget. If this lack of precision bothers you, consider this: anytime anyone makes a budget, that’s basically what they’re doing: guessing!
No one has a crystal ball that can tell the future, so everyone is pretty much speculating what they’ll spend. The thing that sets apart a good budget from a bad one is that the estimated amounts you use are reasonable and realistic for your situation.

Again, that’s why the expense tracking thing is such a big deal, because it helps you base your budget on your spending patterns and no one else’s.

Housing & utilities expenses tend to be pretty consistent and straight-forward. Eventually, though, you will get to categories that aren’t as set in stone. Let’s show you how to work through those, using the groceries category as an example.

monthly budget sample plan expenses that are not the same
Sample expense tracking calendar with groceries highlighted

In the above example, we can see that this person tends to buy groceries roughly once a week, and spends between $120 to $180 each time they hit the supermarket.

In this case, you can just add one grocery entry for every week, for an amount in that dollar range.

Remember: Budgeting is simply about making reasonably predictions, so don’t complicate things and get yourself caught in analysis paralysis.

Repeat this entire process for every highlighted expense on from your expense tracking calendars until they’re all crossed off.


For minimum debt payments, only include the minimum amount you’re required to pay to keep the creditors from blowing up your phone. You always want to pay more towards your debt if possible, but we will account for the extra payments under “money goals,” a section that we’ll cover later.

Step 5: Account for larger, less frequent expenses
There are a few tricky expenses that only come up once or twice a year, but they’re pretty pricey and you do have to pay them:

  • Vehicle registration
  • Car insurance
  • Property taxes

It’s easy for these big annual or semi-annual expenses to sneak up on you, so build them into your budget by taking the total, dividing by 6 or 12 months as appropriate, and then adding them as an entry somewhere on your budget calendar.

Step 6: Incorporate your fun spending into the budget
When you’re first budgeting, it’s easy to get all gung-ho and try to cut back on everything because it means you’ll save so much. But…you’ll pretty much end up hating life, which is not what we’re going for here.
Going extreme does zero good for you if it only results in you giving up and going back to the same ol’ spending habits after a month or two. The real way to win at budgeting is with long-term, permanent change, and it’s okay if you have to do that through baby steps.

There are two approaches to figuring out how much fun money to allot yourself:

By implementing gradual change
This option takes into account how often you currently spend on your non-essentials, and has you budget for slightly less and less every month.

For example, if you eat lunch out 5 days a week now, you can put down a lunch entry for 4 days a week in next month’s budget. That way, you only have to come up with home lunch one day a week, which feels a lot more doable than immediately switching to home lunch every day. Then, the month after that, you can go down to 3 days a week and slowly reduce your spending, month by month, until you’re at a level you’re happy with.

By challenging yourself with a small set amount
Set a weekly amount, and stop spending on non-essentials once you hit that threshold within the week. How low you wanna go, and thus how much potential you want to give yourself to save, is totally up to you.
This first option is gentle on your willpower, but the next option does give you the chance to save more. And, it might not be as hard as you think. If you’re willing to challenge yourself, you’ll probably discover that you can get away with a much smaller allowance than you think, especially if you use a few Jedi mind tricks to help maximize the fun you get out of it.

Trick #1: Mull it over
Give a lot of thought to how you specifically want to use the money, rather than just leaving it generically labelled as “fun” on your calendar. For example, you might consider using that money to see a movie, or to go on an ice cream run.

Even if you don’t decide right away, the anticipation of being able to partake in at least some of that fun stuff will immediately start to put you in a good mood and give you a sense of excitement, before you’ve even spent a single penny!

Trick #2: Make your plans, then look forward to enjoying them
Once you do decide on how you’ll be putting that fun money to good use, update your calendar to reflect exactly how you’ll be using it, and move your entry to the date you plan to make it happen.

Having something to look forward to on your calendar and knowing that you’ll eventually get to enjoy it is surprisingly powerful and can even make the experience itself better!

Trick #3: Be selective and aim to maximize your joy

If you go with a set budget amount, over time, you’ll start to become a lot more selective about how you spend your fun money, which is a really good thing. The reality is, not all joys are created equal, and there will always be some things that bring you more joy & happiness than others.

When you’re not paying attention to how you spend, regret becomes an all too common emotion because you eventually realize that you kinda wasted your money on things that didn’t make you that happy. But by then, it’s too late and the money’s already gone.

On the other hand, when your fun money allowance becomes something you think about ahead of time, you aren’t gonna waste it on doing stuff that brings you only a mediocre level of happiness. You’ll naturally start to make choices that maximize your joy to money ratio, and that is money well-spent.

Trick #4: Less is more

Once we dull ourselves to an experience, we tend to enjoy it less. That’s why they say absence makes the heart grow fonder, and that’s true not just of people, but of things and experiences as well.

The less often you do or buy something, the more special it feels when you actually get around to it. And it doesn’t take long for the feeling to set in once you decide to cut back on something.

How to tell if you’re spending too much

With your newly-created budget calendar, you can now check the overall health of your spending habits.

Add up your income for the income, subtract all of your other entries, and see how much money that leaves you with to put towards your money goals.

Money goals refers to any of the big-picture financial objectives you want to achieve, such as:

  • Building up an emergency fund
  • Making extra payments to pay off your credit cards and other debts
  • Saving for your retirement
  • Preparing to put a down payment on your very own home

Having money leftover at the end of each month is the only way you can work towards these goals that create security and wealth for yourself, so you wanna work towards getting to that point where you do have a healthy amount in your money goals column each month.

If all of your expenses together exceeds your income, that means you don’t have any extra money and you’re actually in the negative, which is a big red flag.

To make up the shortage, you’d have to tap into your savings or take on more and more debt. But the problem is, both of those “solutions” will eventually fail, once you drain all of your savings or stop qualifying for more credit.

To fix this problem, you’re gonna have to take on another job or reduce what you’re spending, even on your basic necessities. Heck, you might have to do both.

I know that can be tough to hear, but as much as that news might sting, consider that there are lots of other people with incredible comeback stories who were able to get their finances together and climb out of debt. So you aren’t alone, and if they could do it, so can you!


If you could use a little inspiration, check out the book Slaying the Debt Dragon to read about one family’s incredible journey to paying off over $127,000 in debt.

If you’re pretty much breaking even between your income and your expenses, that’s not exactly a great position to be in either, because it essentially means you’re living paycheck to paycheck.

All it takes is one unexpected emergency or expense, and you could find yourself dangerously close to experiencing major financial hardship.


Looking for ways to bump up that money goals number and save more? Read our post on the best ways to save money that give you the most savings for the least amount of mental effort.

How to use a budget

Once you’ve got your spiffy new budget, it’s time to break it in. Any time you receive income or spend money, you’ll compare it to your budget.

When you receive income
If you bring in more than you posted on your budget, pat yourself on the back, then add the extra income to your money goals total.

On the other hand, if your paycheck fell short, subtract the difference instead.

When you have expenses
Any time you’re prepared to spend or pay a bill, compare it to your budget.

If the expense ends up costing you less than you budgeted for, sweet! Add the savings to your money goals total.

If you end up spending more than you budgeted, subtract the overage instead.

If it’s something that’s not on your budget at all and you decide to go for it anyway, that too would also be a subtraction from your money goals amount.

A budget doesn’t have to be a jail sentence, so we’re not saying you should ban yourself from spending on anything that isn’t on the budget. We just want you to think before you make a move, because you don’t want to fall back into the cycle of spending carelessly and then regretting your decision.

The honest reality is that all spending is a trade-off. It’s just that our brains are too busy to really think about the ramifications of our decision every single time we spend. Subtracting the dollar amount from your money goals balance is a reminder that there’s definitely a trade-off happening, which helps you see the spending choice what it’s truly worth and not worth.

As for all that other spending that is budgeted for but simply turns out to be over or under, keeping track helps you see if you’re consistently budgeting too low or too high.

Although most people can pretty much use the same budget calendar and figures month after month, we recommend keeping your budgets in a binder so you clook back a few months and tweak things if you notice a pattern of being slightly off on your budget figures.

For anyone who has really variable income or very seasonal spending patterns, your budget binder will be especially helpful.


Learn how to create a monthly budget with our step-by-step budgeting tutorial. We’ll show you how to budget, all the key steps in the budgeting process, and our best budgeting tips and tricks to help you create a budget that sticks.




stacy trinh aka aunty chang headshot


STACY, aka AUNTY CHANG, is a personal finance blogger set on a mission to show people that there's more to money than just the numbers. With two rental properties and a six-figure 401k by her 30's, she's on track to retire early without sacrificing work-life balance to get there. She wants to teach others how to identify their goals and use money to make them happen. Dual income, no kids, based in Hawaii.

Hangs out on Keeping Up with the Changs: Facebook | Twitter