Budgeting Made Easy

How to build a budget that helps you save money and avoid problems with debt.

Building an effective budget doesn’t have to be complicated, and it’s worth the time you invest because it helps you stay on the financial straight and narrow path. Now, with today’s technology, it’s easier than ever to maintain a budget and use it as a tool to reach your financial goals.

The information in this section can help you make a budget that works for you. If you’re having problems balancing your budget because of high debt, we can help. Use our free Debt & Budget Analysis to identify where you’re having problems, or we can walk you through the process personally. Call to get started.

Step 1: Pick Your Favorite Budgeting Platform

Most people’s number one complaint about budgeting is how time consuming it is to build, but in a world of apps and computer programs, that excuse no longer holds. There are a wide range of tools you can use to budget online or on your phone. These budgeting tools help you make a budget in minutes and maintain it anywhere in the world.

So your first step should be to choose the best budgeting tool for your needs:

  • If you have a smart phone or iPhone-enabled device, we offer a free Budgeting App.
  • Online platforms like PowerWallet usually come with extra features like daily deals and point rewards.
  • For more privacy, you can use budgeting software or even build your own platform with a spreadsheet.
  • And if you’re more traditional, there is always pen and paper budgeting. For that, we offer the following budgeting worksheets to help you out:

Step 2: Get Your Numbers Together

No matter which method you choose, you’ll need to gather the same kind of information to make your budget. In general, you need the following:

  • Three months of paystubs and other income statements
  • Bank statements from the past three months
  • Current statements for all credit cards and loans
  • Bill statements for all utilities from the past three months
  • Information for any investment accounts, such as an IRA or a 529 college savings fund

In addition, if you use cash often to make purchases, you may need to pull together your receipts from the past few months so you can total up your expenses correctly.

Step 3: Define Your Spending

As you set your budget, you need to identify different types of spending in your expenditures. The following define the three main types of expenses you have:

  • Fixed expenses are necessary expenditures with a fixed cost every month, like your mortgage, car payment and homeowner’s insurance.
  • Flexible expenses are necessary, but don’t have a fixed cost. These include variable bills like utilities, as well as necessary expenses like food and gas.
  • Discretionary expenses are the nice-to-haves in your budget – the wants. Everything from gym memberships and trips to the salon, as well as things like magazine subscriptions and tithes go here.

For flexible and discretionary spending, you should do a bit of investigating to see how much you really spend each month on each cost. Look at your account statements and receipts for the past three months and take an average of your monthly expenditures to determine how much money you need to allocate for each expense.

It’s important to note that online platforms will generally “categorize” your expenses, so you make categories like entertainment, home, and pets. Even so, these categories all fall under the three main types of expenses. As you categorize, decide which categories are must-haves and which are nice-to-haves.

You may also want to divide certain categories up since they may have wants and needs included. For example, food is a necessity. Eating out is not. So you might want to have a category for groceries and a different category for dining.

Don’t Forget to Maximize Your Debt Payments

One of the great things about creating a budget is you see exactly how much money (free cash flow) you have left over each month once all your necessities are paid. This means you can decide how much money you have available to pay off your debts as quickly as possible.

Specifically, you want to allocate as much money as possible to your credit card payments. This helps you reduce debt quickly so you can keep it minimized and avoid financial distress.

Set Savings into Your Budget

Another great thing about building a budget is you can see how much money you have available to save. In general, you want to set aside at least 5 percent of your monthly income for savings.

With a budget, you can actually set savings as a line item. So essentially, you decide how much to save and then make this a “fixed expense” in your budget. You add it as a line item so you always remember to pay yourself.

Additional Budgeting Resources

The information above is designed to present a basic overview of everything you need to know to create an effective budget. If you want to know more, we offer a handy Budgeting Made Easy self-help booklet that you can download for free. It expands and explains each of the topics mentioned above in more detail.

If you still have questions, you can also call us at and we’d be happy to answer any questions you have.