Table of Contents
How to Make an Easy Beginner Budget Plan in 7 Simple Steps
One of the questions I get asked a lot is how to make an easy budget plan. If you’re new to this, you’ll want to get started right away on a beginner budget plan. This should be the first thing on your financial To-Do List And it should be done at the beginning of each month religiously. It is especially important if you have financial goals such as becoming debt free, achieving financial freedom, owning a home, becoming a business owner or being able to afford to pay to send your kids to college.
I know. I know. It might sound scary but it’s an important first step in your financial journey. Not sure where to start? No problem! Learn how to make an easy beginner budget plan even if you suck with money, or if you’re living paycheck to paycheck. You’ve got this!
This post may contain some affiliate links. This means that I may make a small commission if you purchase via a qualifying link (at no extra cost to you!). You can read our full disclosure for more info.
You’re counting down the days to get paid. You live paycheck to paycheck. You feel like you’re neck deep, drowning in bills and payments each month and you have no real plan forward.
If this sounds anything like your life and you’re ready to grab control of your financial life once and for all, you’re ready to get started on a beginner budget plan.
You know what they say. The first step is acknowledging that you have a problem.
What is a budget plan?
Well a budget plan is really you instructing your money what to do. It allows you to take control of your money instead of letting your money control you. Know what I mean?
A budget plan is the process of figuring out exactly how much money you make, how much money you spend and how you spend that money.
A good budget is one where your income is more than your expenditure and this is what we are going to try to accomplish.
Why follow specific steps when making an easy budget plan?
Why budget? To be organized of course! Budgeting takes the guessing out of your monthly accounts because it’s a form of planning your financial month. Be organized means that you will never make late payments, never spend more than you make and be able to attack your debt and save more money.
Getting started on an easy beginner budget plan helps you have control over your numbers (your income and expenses). You can’t really change your fixed costs but having a budget with all your numbers in one place, can help with reevaluating expenditure and putting every dollar to the best use possible.
A beginner budget can also help you to be prepared for any financial hurdle that can be thrown your way. Needless to say, budget planning is pretty important.
Before you get started on creating your beginner budget plan, grab this FREE Printable Budget Pack to make each step simpler, stay on track and stick to your budget!
How to Make an Easy Beginner Budget Plan in 7 Steps
Here are the steps to follow if you’re trying to learn how to make a beginner budget plan.
Beginner Budget Plan Step 1.
Write down ALL your expenses
Your expenses include everything that you need to pay for each month. It might look something like this:
- Mortgage/Rent – $2500
- Student Loan – $1000
- Credit Card Minimum Payment – $300
- Insurance – $100
- Groceries – $800
- Electricity – $100
- Cell Phone Plan – $100
- Cable – $50
- Internet – $50
- Magazine Subscriptions – $50
- Recreation – $200
- Netflix – $10
Beginner Budget Plan Step 2.
Write down all your monthly income
The next step in setting up of an easy budget plan requires you to write down all of your monthly income. This may be easy for someone who has one fixed salary every month. However, if you’re no stranger to side hustling, your monthly income may look something like this:
- 9-5 Income – $2234
- Freelancing – $300
- Blogging – $500
- Babysitting – $200
Beginner Budget Plan Step 3.
Determine your current financial position
To do this, you will need to subtract your total expenses from your total monthly income. Remember your ultimate goal is to always spend less than you earn so if you get a negative number, this means that your expenses are greater than your income and you’re living way above your means.
You want to live a lifestyle where your expenses are less than your total monthly income. And to do this you will need to analyze your expenditure.
Which brings me to the next step…
Beginner Budget Step 4.
Reevaluate your Expenses
Even if you did not get a negative number in step #3 above, there is always room for reevaluating your expenses. This means taking a closer look at everything on your expenditure list and determining what is absolutely necessary.
Some expenses will be fixed and necessary. For example, mortgage/rent (whichever applies to you) will always remain fixed and is necessary unless you’re open to sleeping on a park bench.
Other expenses are luxuries and it is up to you to decide which of them you can or cannot live without. Let’s look at the ‘Magazine Subscriptions‘ in the Expense List above. Are these necessary? And what about TV Shows; do you really need to pay for both Netflix AND cable? How about choosing one instead?
Then there will be the expenses that are necessary but can still be reduced. For example, you can cut your grocery bill in half by meal planning and having a proper grocery list. You can also cut your Electric Bill in Half with a few simple changes.
Pssst! Did you know you can save more money by meal planning? Meal Planning saves me thousands of dollars every year! Not sure how to get started? Grab a copy of my free Meal Planning e-guide below.
Every little adds up and amounts to BIG savings in the end!
All extra can be allocated towards increasing your minimum payments on your credit cards and loans and increasing your monthly savings.
Beginner Budget Step 5.
Choose a Budgeting technique & Stick to your budget
Creating a monthly budget will benefit you in no way whatsoever unless you stick to it. And sticking to your budget will be way easier when you choose a budgeting technique that works for YOU.
This means that you need to use a system that is best for you. Research various methods such as the cash envelope system or the 50 20 30 budget (you can choose various methods and budgeting techniques since most of them overlap) and determine which will be easiest for you to stick to.
The Cash Envelope system is really easy to follow. Here’s how it works. After creating a weekly sub-budget, you should allocate money towards your different expenses, that includes groceries, kids’ allowance, bills etc. You then put the allocated cash into different envelopes.
The trick is that you cannot use any money from your groceries envelope for anything else but groceries, and so on. It helps you to stay on track and stick to your budget.
Want to know more about cash envelopes? Check out this post on The BEST Cash Envelopes to Prevent Overspending (+ FREE Cash Envelope Templates).
Beginner Budget Step 6.
This is such an important step in the budgeting process. Becoming successful at budgeting will require you to stay organized. This means that you must have your budget plan, bills, receipts etc. in one place. This could simply be a paper folder with some paper clips or if you’re extra like me (HA!) you can invest in a planner like this.
Another option for staying organized is the use of an excel spreadsheet or an online financial planner like Personal Capital.
Beginner Budget Step 7.
Set Financial Goals
The last task in successful budget planning is to have specific financial goals. When you’re able to define your goals and visualize them, you’re way more likely to stick to your budget and be motivated to save. If you’re a visual person, create a vision board or post a picture of your goal on your refrigerator. Write down your goals, set deadlines and map out your plan to get there. A good idea is to have mini-goals to make your journey seem easier and more doable!
Now that you know how to make an easy beginner budget plan,
Grab your pen and paper and start writing! Welcome to your journey to financial freedom! This is the first step for you to take. Get started now and you’re well on your way to financial success. Pretty soon you’d be such a pro that YOU would be the one explaining to others how to make a budget plan!
Are there any other important steps in the budgeting process that you’d like to add? Do you have any other beginner budget tips? Share with us in the comments below. I’d love to hear from you!
Don’t forget to share and pin for later! While you’re there, I’d love for you to follow on Pinterest!
***Before you go, are you looking to manage your money better this year? Sign up for my free 5-Days Money Management Course!***
Related Easy Beginner Budget Plan Articles: