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The Basics of Creating a Budget


Creating a budget can be quite simple, but many of us have never practiced keeping a budget, whether that be because we don’t care too, or that we were never taught to do so. The truth of the matter is that budgets are paramount to changing your financial circumstance.

It’s not about how much money you make, it’s about your budgeting. Even world renown actors and sports players have lived from paycheck to paycheck. Without a budget we simply spend what money we have, no matter the amount.


You may have heard the old saying,

“If you keep track of your pennies, your dollars will take care of themselves.”

The first part of this saying is also the first piece to create your own budget. We need to keep track of our funds and where they are going. You may be tempted to think you know where all of your money goes and think that keeping track is just a waste of time, but this way of thinking is a dangerous trap that so many of us fall into.

Have you ever found yourself simple living from paycheck to paycheck, or even wondering where your money went, when the month is only halfway over?

This happens because simply knowing how much money you make and knowing generally how much you spent isn’t enough. Keeping track is a MUST. Not only is it crucial to the second half of making a budget, which we will get into shortly, but you will often be surprised how wrong you were about where all the money goes. Let me share an example.

When I started budgeting, the first thing I did was go back and look at all my bank statements. When I did this, I realized just how much money I was wasting. I was subscribed to four movie sites and only really used one of them. I was paying for online games I didn’t play anymore and my food expenses… those were out of control. There were other items I was also spending my money on that I really didn’t use, or care too much about, simply impulsive buys.

It was eye opening to see where my money was actually being spent! When I saw how much I was wasting, most of which was not even necessary, I was flabbergasted! Seeing it all, I came to the realization of just how powerful tracking your spending could be. When I became aware of what was happening, I was able to do something about it.

Through planning, the second half of creating a budget, I saved myself close to 20% of my monthly income, to put towards savings and things that I truly cared about.


After keeping track of your spending and find those areas where you may be overspending, or wasting money, then you can dive into planning. This is so important because without a plan you are just guessing. In reality, if you don’t plan, you plan to fail. So, let’s say you make $2,000 a month. You minus your essential payments each month, (i.e. health insurance, house payment, car payment, etc.), then you see what you are left with. What is left, you then allot to the other areas, such as food, recreation and savings. Once you have things planned out, you know exactly how much money you can use and will be less tempted to splurge.

A budget (tracking and planning), is essential to improving your living situation. If you are always living paycheck to paycheck life will be much more stressful and you will spent money in places that you really don’t need to.


Go back to your bank statements, or if you can’t, keep track of every cent you spend over a month’s time.

Next, plan where all of your money will be used. And look at it often, or keep a copy with you, so you can follow it.

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Hanna Ovr
Hanna Ovr

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