How to Build a Successful Budget

I’m new to developing budgets. In fact, I’ve really only been actively budgeting for the last few months - that is, tracking all of my expenses, updating my budgets monthly to account for differing expenses, and thinking realistically about how I’m allocating my money and where I can be implementing more savings. The initial steps in setting up a budget are incredibly time consuming, but ultimately so worth it is you’re trying to understand where your money is going in order to save more! Which is really the goal. So how can you develop a successful budget that will save you money like never before?

Track Your Expenses

This is definitely the first step in successful budget development. I made a spreadsheet and then went through and tracked every single one of my expenses for the last three months. Okay, yes, that may sound extreme, but knowing what you spent in one month just doesn’t account for variability, so a three month average did the trick for me. Knowing what I spend on average was the first step for me, but just because I had been spending a certain amount doesn’t mean I didn’t have goals to spend less. When you’re tracking your expenses try to do so with as little judgment as possible. This is probably the toughest part of this step. It’s easy to wind up in a shame spiral if you’re not careful when tracking past spending. Just remind yourself that you received value from all of those purchases and move on to figure out how you’re going to change your spending habits going forward (should saving more or paying off more debt be your goal).

Think About Your Financial Goals

This is such an important step to meditate on before you sit down to build your budget. Maybe your goal is (like mine) to aggressively pay down debt. Maybe it’s to save for a big purchase like a house, or to build your emergency fund, or to invest a significant chunk as you work toward a more financially independent future. Or maybe it’s not of the above! Your goals are personal (as they should be!) and so, whatever they are, there’s a budget out there for you.

Build Your Budget

First off, know that your budget will be unique to you! There are a lot of articles on the internet that tell you how much you’re supposed to be budgeting in each category each month, I’m here to tell you that it’s okay to throw those equations out the window! You know your financial goals better than the internet and your budget should be aligned with those. So how, then, do you start to break it down?

Total Income

Obviously this is an important step - how much are you bringing in from your day job and all of your side hustles? Knowing your total income is key if you’re going to build a successful budget. If your income varies from month to month it is always good to underestimate, that way if you have excess money at the end of the month, you can put it toward your financial goals.

Fixed Expenses

Fixed expenses are the things you pay for every month and typically the costs are the same. These are your utilities bills, rent/mortgage payments, cell phone bill, transportation costs, etc. Having a pulse on your fixed expenses is important as you build your budget as it will help you determine how much of your budget is left over for things like savings, debt repayment, and incidentals.

Debt Repayment and Savings (Your Financial Goals!)

This is probably the most variable category person to person and, again, it depends completely on your financial goals. Since my goal is to aggressively pay off debt right  now, my debt repayment accounts for almost 40% of my income. That’s a lot and I recognize that, but since debt repayment is my number one priority right now, it’s worth it to me.

Flexible Costs

These are the costs that vary from month to month, though you can definitely set limits for yourself on how much you’ll dedicate to this area. These are things like groceries, gas, shopping, entertainment, etc. It’s good to overestimate your expenses here in the same way you underestimated your income - it helps give some cushion, which is important if you’re going to be successful in sticking to your budget.

You may be wondering how to figure out these percentages - that’s where your spending tracking from step one comes in. You also have the option of following a few plans that have been laid out as budget-smart by other folks. These include:

The 50-20-30 Budget Rule

This budget argues that no more than 50% of your budget should go to fixed costs, around 20% should go to financial goals, and around 30% to flexible spending. A lot of folks have found great success with this method and it’s definitely worth trying out to see if your categories align. With that said, it just doesn’t work for me! I, personally, need more flexibility and want to target my financial goals with my budget in a way that this rule just doesn’t allow for.

Zero Sum Budget

This budget assumes that you spend exactly what you earn (no racking up debt!) by allocating precise amounts to each category each month so that you have a zero sum balance at the end of the month. Basically, your totals can be whatever they want, so long as you’re not spending any more than you earn and you’re allocating in line with your financial goals to things like debt repayment and savings. This is how I write my budgets. For me, it’s helpful to think about budgets in terms of spending limits and so this method makes sense for me. Plus it has the flexibility to account for my shifting needs and priorities while still ensuring that I’m not spending more than I earn.

Maintain Your Budget

There are so many ways to maintain your budget. I personally use a combination of the methods below that works well for me, but you are welcome to tend your budget in whatever way makes the most sense to you.


A classic budget maintenance tool, spreadsheets allow for fun things like formulas to be crafted so you can determine, as you go through the month, just how much you’re spending compared to your goals and plans. There are several great spreadsheet tools out there so I didn’t recreate the wheel with mine. Instead, here are a few that might be useful:

Apps/Online Programs

These are handy because you can link them directly to your bank accounts and they will update your budget categories automatically. With colorful charts and graphics, these apps are an easy way to see where your money is going and to try plugging in different amounts to get to that zero sum. A couple of my favorites are:

Pen and Paper Budgeting Planners

One of the reasons I started this blog was because I received Cait Flanders’ Mindful Budgeting Planner as a birthday gift and knew that I wanted to share my financial journey. This planner takes the spreadsheet and app work to paper and also allows you to write down things like goals and plans and to keep it all together in one space. With daily, weekly, and monthly budgets, this journal has just the right flexibility to meet my needs. I’m sure there are others out there, but Cait’s is the cream of the crop for me.

Frequently Check Your Accounts

I check my accounts daily and recommend doing so at least weekly. The more you monitor, the more likely you are to not spend as freely, which is the point! Plus if you need to make any course corrections along the way or account for any unexpected expenses, checking your accounts at least weekly will help with that.

I also, obviously, check my accounts at the end of every month to determine if I spent within my means and to develop a budget for the following month. If you ended up under budget - congratulations! That’s great news! If you ended up over budgeting - no need to fret. You may have had some unexpected expenses or perhaps didn’t budget enough for groceries. The beauty of a budget is that while it provides guidelines it is also flexible, so it can shift and change as your financial situation shifts and changes.

Give Yourself Some Grace

Budgeting is not easy. What is easy though? Getting down on yourself for not sticking to your budget perfectly. We all have temptations and sometimes we give in, that doesn’t make us wrong or bad, it makes us human. So don’t forget to give yourself a little grace as you move through this process. Taking control of your finances is a difficult step and mistakes are common. Just keep getting back on that horse and continuing to ride; you won’t regret it.


  1. My boyfriend created and budget in Google Spreadsheets with a lot of complicated formulas, but it's super handy!

    1. I'm so glad it's been helpful for you, Oana! I use something similar. That's what it's all about - finding something that works for you!

  2. This is so helpful, as my hubby and I were just talking tonight about starting a budget again since baby is on the way! I used to use Mint and loved it!

    1. Wow - congrats on the new baby, Kelsie! So exciting! Mint is one of my favorite tools, personally. I check it daily for extra accountability. Good luck with everything with your little one on the way. :)

  3. I've never heard of the 50-20-30 rule. How interesting. We've set our sights on paying off our PMI this year. We're going to do our best with being aggressive about it while still traveling this year. We use YNAB to budget. It's awesome!

    1. That's incredible, Megan! Congrats on having such awesome goals while still maintaining your lifestyle and what's important to you. I've been meaning to look more deeply into YNAB. I've heard great things! Glad you've found something that works for you!

  4. Great tips! I use spreadsheets religiously to track our spending and create spending goals. I think figuring out where your money is currently going is an important first step, because many of us probably spend more than we realize!

    1. Totally agree, Erin! I know that when I first started tracking I was so surprised by how much I was actually spending! It's so important to figure that out if you're going to reduce and do things like pay off debt and save.