September 6, 2021

5 Simple Steps to Creating a Budget

If you're looking to start budgeting, here's a great 101 lesson on how to get started today.

12 min read

Qoins Staff

@qoinsapp

We always mention budgets and why they’re important but today we’re going to talk about how to actually set up a budget. It may seem difficult, pointless, or just plain boring, but a budget is one of the best financial tools at your disposal! We’ve even got a FREE tool to help you get started.

Budgeting allows you to take a good look at your overall financial situation. It will show how much money you’re bringing in, where you’re spending, and how much you have left to save. This gives you the ability to view and cut your expenses and allocate more funds for savings, retirement, or investments.

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How to Start

  1. List your incomes
    List out the total income you receive for the month. Make sure to include any side hustle income, dividends, or other recurring “bonus” money.
  1. Write out your expenses
    Here you’ll want to list all of your fixed and variable expenses. Fixed expenses are any expenses that don’t vary in price over time, like your rent, phone bill, Netflix subscription, etc. Variable expenses include food, gas, entertainment, etc.Be sure to include every single thing you spend on to make the most of your budget. It may be daunting but writing it all out will give you a better idea of where your money is going.Don’t forget to list debts as well. You can write your monthly payment for a debt out as an expense. Ex. Credit Card Payment – $98.00
  2. Calculate
    Once you’ve listed all of your income and expenses, you’ll have to do some quick math on what’s left. Any fourth grader should be able to help you with this if you’re struggling, or just pop the amounts into an excel spreadsheet to keep it updated.Take your total income and subtract your total expenses from it. What’s left is your take-home money. This amount is free to put towards savings or investments or an emergency fund if you don’t have one set up (which you should).
  3. Set savings goals
    Setting up savings as an expense can help you stick to your goals. The idea here is to assign your money to a specific savings goal and not just save what you think is good each month. After all, you should save before you spend, not after.The budget shows you where your money should go and how much you can put towards each goal. Then you’ll need to actually automate transfers or direct deposits for those amounts into a separate account to not be tempted to spend your savings.
  4. Update & automate
    The final step to your creating your budget is actually just keeping up with it. Make any necessary changes and adjust your goals if you’re trying new spending habits.

Be Realistic

The budget is a tool there to help you, but what’s a tool good for if you don’t use it? It can take some time to set it up (our free template can help) but afterward, it’s easy to keep up with and it will definitely help you in the long run.

Just be sure to be realistic about your expenses and your saving goals. Give yourself some breathing room on your expenses because you may spend more than your budget shows. The budget should help you control your spending by giving you a better idea of how much you have to spend.

You can either track your spending to the penny or simply give yourself an overall spending allowance to ensure you don’t spend more than you can afford to.

Be specific with your saving goals. Don’t just say you’re saving for a new car, actually write out the amount you want to save for the down payment. Then create a plan that you can break down into actionable steps.

Our FREE Budgeting Tool

We’re always here in your financial corner, happy to help in any way we can! That’s why we’ve provided a FREE budget template to help you get started. Simply input your numbers (income and expenses) and let the spreadsheet do its magic (math). And if you want to automate your savings and pay off debt journey to make your budget a guaranteed success, check out Qoins!

Just click the link below to view the spreadsheet then download it to start filling in your own numbers: https://docs.google.com/spreadsheets/d/1dOgHhM-joqv69YjrAwmEy410YrhVglAMBM_aVTAS91M/edit#gid=1921003061

If you run into any problems or have questions, you can always contact us: support@qoins.io

What do you think of budgets? Are they amazing? Boring as ever? The greatest financial tool known to man? Let us know below!

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