How to Create a Budget Plan

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5 Simple Steps

how to create a budget plan 5 easy steps

How does the word budgeting make you feel? No, you haven’t stepped into some strange financial therapy session. However, I want you to really think about it. What words come up when you think of a budget plan? I can guarantee with confidence that many of you reading this have feelings of stress, overwhelm, and negativity when reading or hearing this word.

It’s no surprise. Something I talk about often is the way in which budgeting and scarcity mindset is intertwined. From a societal and systematic viewpoint, at least. Although creating a budget plan requires willpower, determination, and planning, it doesn’t have to be so complicated and stressful. It’s about establishing small and smart actions which in turn form habits that lead you on the glorious road to financial freedom. 

I’ve come up with five key things that everyone can do to create a simple and doable budget plan. Emphasis on the word DOABLE here. And, you know what? If you do, you’ll be doing a lot better than more than half of the American population. According to US Bank, only 41% of Americans follow a budget plan. When you think about that, it makes sense that 80% of Americans also report living paycheck to paycheck.

Learning to create a budget plan can be the first step towards breaking that cycle. To make it as straightforward as possible, I’ve mapped it out in five simple steps. 

Don’t bail before the end, I have a free template for you, to get you started! 

1. Know Your Income

budget plan money gif

This might sound super basic but it is absolutely vital that you know exactly how many dollar bills you have each month to work with. It doesn’t need to be complicated, so just focus on your take-home pay for this. How much money is going into your bank account each month?

Peruse your previous paychecks as an estimate and to give you the most accurate and up to date amount. Estimate all sources of income for the month and total those bad boys up to see how much you’ve got to work with. This is the first thing you put at the top of your budget plan.

2. Know Your Bills

overdue bills budget plan gif

No one likes watching the money they work so hard for each month leave their account. Unfortunately, it’s inevitable, and the more familiar you are with your expenses, the better your budget plan will be. Write down and add up all your bills. Not only should you include the obvious such as gas, groceries, household stuff, etc but also all items that have a due date. It’s important to remove the bills first before you get to anything else. This is the second thing you write down in your budget plan.

3. Savings Goals

Before we dive in. I want you to take a moment to really think about what you want. I have seen so often people getting caught up in what they think they want or think they should want. Your happiness and goals are just that, YOURS. Before incorporating financial goals into your budget plan, figure out what it is you’re working towards. You don’t have to have the same aspirations and objections as everyone you follow on Instagram. 

Think of savings goals as anything that you want to make sure you have money for when the time comes. Too many people make the mistake of just creating an “emergency fund” and nothing else but you need to save for more than just emergencies. Because, where is the fun in that? Emergencies do need to be planned for and deserve space in your budget plan but there should also be room for more pleasant things!

Set savings goals in your budget plan for things like treating yourself, travel & holidays, regular bills that come up annually, gifts, etc. 

Once you determine your savings goals, write those things down on your budget plan as well, adding up your savings before moving on to spending. Do NOT make the mistake of deciding to save “whatever is leftover”. Trust me, there will be nothing leftover. We are doing zero-based budgeting here. Every single dollar and penny has a job. It is either going to bills, savings, or spending. There is no random buffer floating around in the universe. This is the third thing you write down in your budget plan and it’s very important to do so before you get to your spending.

4. Monitor Your Spending

Whatever you have leftover is what you have available for spending. If you have nothing left over then you need to revisit the categories above and make some adjustments.

Pro Tip: If you need to make adjustments start with bills. Can you reduce your monthly bills?

Read more about how to reduce your bills right now

The reason I advise starting with reducing your bills is that you have more control over what you spend than what you make. Let me say that again:

You have more control over your spending than your income

Sarah Blanchfield

So when it comes to creating more space in your budget, you should look at your spending first. It’s not always comfortable at first but it is the fastest way to increase the margin in your budget plan.

Once you’ve got your amounts right, then decide how you will be using your spending money. I find it easiest to assign categories so that I don’t accidentally spend too much eating out instead of having enough gas money. We’ve all been there but it’s best to avoid it! This is the last thing you write down in your budget plan! You did it!

5: Use a Template

I got you budget plan

The easiest way to make sure you create a simple budget plan successfully is to use a template. Fortunately, I have one I made just for you! 

Use this template alongside following the steps above. The best part is, it’s completely free. I know how powerful a budget can be in helping you achieve your goals. I don’t think ANYTHING should stand between you and having a budget.

Have more questions? Why not slide into my DMs on Instagram and we can chat! 

I’m Sarah


On a mission to change the world of finance from stuffy suits and guilt-trips to a place of understanding supported by solid strategy; I have personally journeyed from homeless teen mom to ass-kicking CEO and now my work centers around empowering women like you to do the same.

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