How to Make a Budget
Step 1: Identifying Your Expenses

The first step in learning how to make a budget is to identify all of your expenses, from rent to vet bills, from car insurance to hair cuts. If you haven’t already done so, you’ll need to print out a budget worksheet. Click here for the Personal Budget Worksheet, or click here for the Household Budget Worksheet. Be sure to return to Step 1: Identifying Your Expenses when you have your worksheet in hand.


Do you have your worksheet in front of you? Great! Take a look at it. You’ll notice that there are four columns for expense amounts:

  • week
  • month
  • 6-month
  • year

As you go down the list recording each of your expenses, put the amount in the column that matches how often you have that expense.

For example: if your rent is $800 per month, put $800 in the month column for the “rent” line. If you spend $100 per week on groceries, put $100 in the week column opposite groceries. If you pay your car insurance every 6 months, put that amount in the 6-month column. You get the idea.

Take your time and think this through carefully. Every penny you spend should be accounted for somewhere on this sheet. For example, if you like to stop for coffee several mornings a week, that money has to be accounted for. You could have an expense all its own called "coffee." You could consider coffee as part of your miscellaneous category. Or, you could absorb the cost of coffee out of your personal allowance. It can be set up any way that works best for you – you just have to be sure it lives somewhere on the sheet.

This is one of the most important lessons of how to make a budget: your budget will work well only if your expense worksheet reflects your real spending pattern.

When I’m doing this exercise for myself it helps me to go back through several months or more of my checkbook register to be sure I’ve thought of everything.

Once you’re sure you’ve captured all of your expenses, you’re ready to move from this first step of How to Make a Budget to Step 2: Turning Oranges into Apples. To find out what the heck that means,

click here!

Step 2: Turning Oranges into Apples
Step 3: The Balancing Act

Go back to Making a Budget

Return from How to Make a Budget: Step 1 to the Home Page