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How to Make a Budget: 5 Easy Steps

How to Make a Budget: 5 Easy Steps

Are you ready to learn how to make a budget? Although people usually think of a “budget” as restrictive, it’s actually incredibly empowering. If you’re ready to take control of your spending, save money, or pay off debts, there’s nothing more helpful than a budget.

Understand your current spending.

I have an awesome friend who performs a thorough end-of-year spending review each year. Despite living on a tight budget, she maintains a meticulous budget of all of her expenses and even manages to save for frequent Disneyland vacations!

Her budget planning begins with an annual review of her entire year’s expenses. She inputs everything into a spreadsheet, where she calculates the total amount spent on bills, gas, food, personal and household expenses, and more. This helps her understand where her money goes so she can manage it better.

how to make a budget

Wondering how to make a budget? These online services make it easier.

Of course, aggregating all of your annual expenses into a spreadsheet can be a long, tedious project. It isn’t something that everyone can do.

However, there are several online services that make this process more convenient than ever before.

Countabout is a powerful budgeting tool that can help you understand and make sense of your finances. Sign up now for a 45-day free trial!

BudgetSimple is a free online budgeting tool that analyzes your past spending and suggests where you can cut expenses. It’s an easy-to-use budget planner.

Buxfer is a great option for people with roommates. If you split bills with other people, Buxfer makes it easy to divide those costs and settle up any IOUs. The basic account is free. For $1.99 per month, you can enable automatic account syncing. is a free budgeting tool that will provide this analysis for you. If you link your account, it will analyze your transactions and crunch the numbers for you.

Search for money-saving opportunities.

Once you can clearly see where you’re money has been going, you can look for ways to save money on those expenses. It’s important to be realistic when you’re planning your expenses, so don’t cut back so much that you’ll be miserable and unable to stick to your budget.


Rent is an expense you usually can’t negotiate. You may be able to get roommates, but that can make things complicated.

Many people have found that mortgages are cheaper than rent. We’ve found several ways you can get down payment grants and other help buying a house!

Of course, homeowners can get help too. If you own your own home, find out how to save money on property taxes. You may be able to get free home repair grants, too!

Power bills 

Power bills are often the second-biggest item in a low income household’s budget, especially during summer and winter. Find out how we reduced our bill from $600 per month to just $150 per month with $18,000 in FREE home improvements!


Internet is another bill that you may be able to reduce. If you’re paying $20 or more per month on Internet, check out our list of a dozen low income Internet programs. Some are even free!

Cable & TV Service 

This is expensive, which is why so many families are cutting the cable. Our family discontinued TV service in 2012. Now, we rely on streaming services like Amazon Prime and Netflix. When we can’t find our favorite shows there, we buy the series on iTunes – and it’s still cheaper than cable!

Cell Phone Service 

Cell phones can cost hundreds per month. If you meet low income guidelines, you may qualify for a free smartphone and a free cell phone plan (including data). Pick from this list of providers!


Transportation can be extremely expensive. We’ve found ways to save money on vehicle registration, insurance, gas, and even bike shares!

Student Loans

If you have student loans, your minimum payments can be a real budget-buster. Make sure you’re not paying more than you need to with these tips.


Food can also be a major household expense. Keep it cheap with these helpful tips:

Household products

Some things can be cheaper if you make them at home. Check out these relevant articles:

You can also get cash back from your purchases of food, household goods and more when you use the Ibotta app!

Project your future spending based on this information.

Now that you have an accurate idea of how much you’ll be spending on your expenses, you can design a budget. You can do this in a spreadsheet or by using the free budgeting tools we referenced above.

Many well-known financial advisers recommend a budget plan like the 50/20/30 rule. This rule states that you will spend 50% of your after-tax income on necessary living expenses, 30% on wants and the remaining 20% on savings.

However, that’s unrealistic for most of our readers. In fact, many of us are lucky if our income meets all of our necessary living expenses without wants or savings included.

For years, My personal budget is a simple spreadsheet that lists my expenses in priority order. That way, the most important expenses get paid first (before the money runs out). I start with housing, then transportation, and then bills (like internet and cell phone service). After that, I list the household expenses (like food), savings and wants. You can download my Sample Budget Spreadsheet here.

how to settle debt

Find opportunities to increase your income.

Budgeting can be depressing, especially when you know you don’t have quite enough money to go around.

If you’d like to put more money in your pocket, check out these resources:

If you’re interested in writing for money, you can check out these 5 sites that will start paying you today – or you can learn how to set up your own niche website! If you stop by, I’ll teach you how I make money by running Low Income Relief!

The hardest part is sticking with it.

The hardest part of budgeting is sticking to it. For the first several months, you should revise your budget so that it is both realistic and productive. It may take some trial and error to develop a budget you can stick to.

Here are some tips that can help:

  • Be realistic! Don’t try to confine yourself to ridiculously low expenses that you can’t realistically stick to.
  • Keep yourself accountable with an accountability partner. It can be a roommate, a friend or a coworker. Find someone you can be open and honest with about your attempt to stick to a budget.
  • If you make it through the month, reward yourself for sticking to it. This can be as simple as setting aside time to watch a certain TV show or do something you love. It doesn’t have to be expensive.

Got budget questions?

The financial experts at JustAnswer may be able to help! You won’t even need to leave the comfort of your home. Contact them today!

Nicole is the owner and lead researcher for Low Income Relief. She has over 20 years of professional research and writing experience, and she has been solely dedicated to investigating low income topics for the last 10 years. Nicole started Low Income Relief after a personal experience with poverty. When her husband was medically discharged from the US Army, their family experienced tremendous financial hardship. Nicole was able to gather help from multiple community agencies and move into a nearby low income housing unit in just two weeks! Since then, Nicole has been dedicated to helping low income families in crisis. She regularly spends hundreds of hours combing through countless resources to make sure that Low Income Relief has the most comprehensive and complete resource directories on the internet today. Prior to starting Low Income Relief, Nicole worked as a novelist, journalist, ghostwriter and content creator. Her work has been featured in various print and online publications, including USA Today, The Daily Herald, The Chronicle and more. Her work has also been featured by Google for Publishers and other leading industry publications.


Monday 7th of January 2019

Nicole, thank you for having made this wonderful resource. I find myself telling everyone about it. I wish it was also in Spanish to forward to my friends and family. Thank you again, Martha

Riley Thomson

Monday 7th of January 2019

Martha, I'll pass that along to Nicole. Thanks! -Riley