How to Budget Your Money (for Beginners) + Free Budget Template!

Do you want to learn how to manage your money like a pro, avoid debt, save more money, and actually achieve your financial goals? Then you need to learn how to successfully create and stick to a budget! A budget is simply a plan for your money! It’s an awesome tool that will allow you to track and analyze your income and expenses.

With a correctly set up budget, you will be able to see exactly where your money is going, where you’re overspending and where you can cut back.

In this post, you will learn how to budget your money like a pro!

If you read my post, Money Saving and Spending Tips to Live By, then you know the importance of making smart financial decisions from an early age. The financial decisions you make now will have a profound impact on your life in the future. So you want to make sure you’re in full control of your finances and know exactly where ALL of your money is going.

The easiest way to see where your money is going is to create a budget.

Why Have a Budget?

So why would you want to create a budget? To have a plan for your money, to organize your finances and achieve your financial goals. With a budget, you are in complete control of your money.

Need a few more reasons on why you should have a budget? Let me give you 10 more reasons why a budget is necessary for everyone!

A budget will help you..

• Stay out of debt or cut down on debt
• Control your spending
• Achieve your financial goals
• Build your savings
• Know where all your money is going
• Prepare for any emergencies that may occur
• Save for big purchases in the future
• Save for retirement
• Have peace of mind & less anxiety and stress about money
• See where you can cut back spending

Have I given you enough reasons why you should create a budget ASAP if you don’t currently have one? I hope so!

Download Your Free Budgeting Template

Now, I know setting up a budget can seem daunting, so I’ve done all the hard work and created a budgeting template for you! You can download it for free here.

This is the exact budgeting plan I’ve been using for over two years now. I use it to track all my finances and it’s allowed me to pay off over $28,000 worth of debt in the last year and a half. As of right now, I’m on track to pay off my car in the next three months and my student loans within the next year! I would NOT have been able to do this without a solid budget plan in place.

This budget template will allow you to visually see all the purchases you make, track your loans and monthly bills, analyze your income and expenses by category, analyze your annual income vs. expenses and more!

I made this template to be EXTREMELY user-friendly. So, you will have very minimal work to do in order to analyze all of your finances in one place. This template is a very comprehensive budgeting tool that will include everything you will need to keep track of your money. All you really have to do is enter your purchases into the document, and the document will do all the calculations for you!

How To Set Up Your Budget

Before you read any further, make sure you’ve downloaded the free comprehensive budgeting tool here. This way you can follow along with my instructions below! I’m going to walk you through step-by-step how you can use this template to create your monthly budgeting plan for the entire year!

Step 1: Download Budgeting Template

You’re going to want to click this link to download the Google Sheets template (if you haven’t already) and take a look around. Make sure you download it because this blog post is going to walk you through how to set up your budgeting using the free budgeting download .

Once downloaded, you’ll see that the sheet is organized by tabs on the bottom of your screen. The first tab is your yearly budget overview and from there the tabs are divided up by month.

On each monthly tab, you will see there are 6 boxes: Expenses, Income, Starting Balance, Monthly Bills, Debt Tracker and Transactions. I will go over how to fill these out in the next few steps!

Right now, do not enter anything into your budgeting sheet.

Step 2: Choose your Personal Budgeting Categories

Start by clicking on the “Yearly Overview” tab in your document. From here, you will see that under the “Annual Expenses” and “Annual Income” boxes there are different budgeting categories.

Examples of Budgeting Categories:

• Groceries
• Housing
• Utilities
• Debt
• Pets
• Entertainment
• Transportation
• Medical
• Etc.

These are the categories that you’ll use to categorize your expenses and income throughout the year, so you’ll want to make sure that they reflect your personal life. I have included a few “Custom Category” options where you can type in a new category if you need to add one that isn’t listed.

I recommend keeping the other categories that are already there the same. However, if you really need to change those, you can do so.

Keep in mind, you should ONLY EDIT YOUR BUDGETING CATEGORIES IN THE “YEARLY OVERVIEW” TAB. Do not change the categories in the monthly tabs! Changing the categories in any of the monthly tabs may alter some of the formulas in this document.

The budgeting categories is the only information on the “Yearly Overview” tab that you should edit. All the numbers on this tab will populate based on numbers and information that you enter into your monthly tabs!

Step 3: Planning Your Budget for the Month

Now that you’ve had a chance to look over the budgeting document, we’re going to dive into actually planning your budget for the upcoming month.

For the purpose of showing you how to budget and use this template, I’m going to pretend we are planning our budget for the month of January. The “January” monthly tab serves as an example for the rest of the monthly tabs so you can see how to fill it out.

Anything in the “January” tab that is highlighted in green means that you should fill it out. You can start using this template at any month during the year, but make sure you take a look at the January tab to see an example.

Your Starting Balance

So, now, if you’re budgeting for the month of January, click on the “January” tab and start by typing in the amount of money you’re starting with next to “Starting Balance.” This number serves as a reference point, so at the end of the month you can see how much money you saved or lost.

Actual Income, Actual Expenses and Amount Saved will populate for you, so don’t type anything in those cells.

Planning for Expenses and Income

We’re going to start planning out our monthly expenses and income. You will see under both the “Expenses” and “Income” boxes that there are 4 columns. The first column lists out your budgeting categories that you chose in Step 2. The second column will list out your planned expenses, the third column will show your actual expenses and the fourth column will show you the difference between your planned and actual expenses.

You will ONLY enter numbers into the “Planned” columns. Do not enter anything into the budgeting categories, actual or difference columns because these numbers will populate for you based on other information you add to the document.

A little tip to remember if you forget which cells you can type in: If the cell has a formula in it, do not type anything in that cell. The numbers will populate for you.

If you try to type in a cell that you aren’t supposed to you’ll get an error message that says “HEADS UP! YOU’RE TRYING TO EDIT PART OF THIS SHEET THAT SHOULDN’T BE CHANGED ACCIDENTALLY.” If this notification pops up, click “Cancel” so you don’t change the formula.

Now, take the time to enter your planned expenses and income for the month in your document. Don’t enter a “total” amount for all of your expenses and income as that will populate for you once you’ve entered all your planned expenses/income.

If you don’t know what your planned expenses will be for the month, take a look at your spending habits the last couple of months and base your numbers off of that. Once you start using this budgeting tool, it will be easier to predict your monthly expenses because you’ll be able to see exactly what you were spending money on.

Step 4: Monthly Bills and Debt Tracker (OPTIONAL)

This step is completely optional. I created the Monthly Bills and Debt Tracker boxes as helpful tools for you to use if you want them. If you don’t have debt or don’t want to keep track of your bills, feel free to delete these boxes.

If you do want to use them though, they’re straightforward and easy to use! In the “Monthly Bills” box, you can type in all your bills and their due date. Once you’ve paid them, just check them off! This is a really easy way to see which bills you’ve already paid and which ones you still have to.

In the “Debt Tracker” box, enter your loan provider, the due date, the amount you paid and the remaining balance. This will be helpful from month to month so you can go back and see the progress you’ve made.

Step 5. Enter your Monthly Transactions

This is the most important step and I’ve made it very easy for you to enter all of your transactions! Under the “Transactions” box this is where you’ll enter ALL transactions (income and expense-related). Every time you make a purchase or receive a paycheck, enter it into the “Transactions” box on your spreadsheet.

You’ll enter the date, the amount of money, a short description, and choose the budgeting category that you want the transaction to be categorized under. 

The categories that are listed in the drop-down menu are all categories that you chose or added on the “Yearly Overview” tab. If you change any of the categories in the “Yearly Overview” tab, the new ones will appear under here as well! Like I said, I made it extremely user-friendly.

Once you enter a transaction, you can scroll up on your document, and see that whatever you entered will appear either under your expenses or income boxes in the category you chose!

This makes it easy for you to analyze your planned and actual expenses at the end of the month.

Step 6: Analyze Your Monthly Budget!

At the end of each month, I go through and analyze all the expense and income categories on my budgeting sheet. You’ll want to use these numbers as a reference point an maybe even a learning opportunity for your budget next month.

If there were categories you over-spent in, then you know where you need to improve next month. If you need to cut back on your spending, check out my post 15 Money Saving Hacks That Saved Me Hundreds. I go through my best money saving tips that you can easily implement right now to save money quickly.

At the very end of the year, you will analyze your yearly budget by clicking on the “Yearly Overview” tab. All of these numbers will have populated for you just from you entering your monthly transactions into the spreadsheet. You should not enter any numbers into the “Yearly Overview” tab. This tab provides an easy way for you to get an overview of your annual expenses and income!

If you still need to download this budgeting resource you can click here!

I want to be a resource for all of you as well! If you have any questions on how to budget your money or need help setting up the document, leave me a comment or email me! I’d be happy to answer any questions for you!

If you liked this post, pin it to your Budgeting Board on Pinterest!

You may also like:

• 8 Tips to Pay Off Your Student Loans Fast
• Money Saving and Spending Tips You Should Live By
• 15 Money Saving Hacks That Will Save You Hundreds

This post was all about how to budget your money for beginners!