How to Make a Budget

posted in: Life, Resources & Tools | 1

Setting up a budget can be tough, nay, and absolute headache. But, once you’ve tackled the brunt of it, it’s all smooth sailing. To make budgeting simpler, I’ve put together a budget template and am sharing with you what I call “the golden rule of budgeting”.

Whether your goal is financial independence or you just want to have a better grasp on your finances, these tools with help you be able to pay your bills as well as save for the future.


Step 1: Preparing your budget

First, set up your budget using this fill-in-the-blank Budget Template. Download the template then input your own information. The only boxes you need to worry about changing are highlighted in yellow. Once you’ve done that, then you’re ready for Step 2.


Step 2: The 50/20/30 rule


The golden rule when it comes to budgeting your money: The 50/20/30 Rule. To put it simply, this guideline breaks up your budget into 3 categories: what you NEED (50%), what you SAVE (20%), and what you WANT (30%). These amounts refer to the amount of your take-home pay, which is the amount you receive in your paycheck.

Let’s take a closer look:

What you need – 50%


What you need are your fixed expenses – everything you know that you absolutely have to pay every month. Things like your rent or mortgage, car payment, car insurance, utilities, cable, and internet are all fixed expenses. You may also want to include any subscriptions or memberships you may owe each month like a gym membership or Netflix subscription. What you need should use up no more than 50% of your take-home pay.

What you save – 20%


What you save are your financial goals. This could be saving for a rainy day, saving for something specific, like a trip, house, gadget, etc., or your goal may be to pay down your credit card debt or student loans. What you save should use up no more than 20% of your take-home pay.

What you want – 30%


What you want is considered flexible spending. These are your everyday living expenses like groceries, gas, entertainment, eating out, clothes, etc. Your flexible spending is determined by any money you have left over after making sure that your fixed expenses and financial goals have already been taken care of. What you want should use up no more than 30% of your take-home pay.

Step 3: Using your budget with the 50/20/30 rule

We now know what the 50/20/30 rule is, but how do we use it? The best and most efficient way is to have two checking accounts: one for fixed expenses (a “Bills” checking account) and one for flexible spending. I suggest setting up a savings account too.

Using the budget template I mentioned at the top, determine how much of your monthly income will go toward your Needs and your Saves. Then, when you get your paycheck, transfer that bi-weekly amount from your regular (or flex) spending account into your Bills and savings accounts. Once it’s in there, do not touch it unless you’re paying a bill or putting money toward debt or savings. This way, you know you’ll always have enough money to pay the bills and whatever is left over in your regular checking account is yours to spend on the Wants. Similarly don’t use what’s in your regular checking account to pay any bills (unless you absolutely have to).

If you follow this, even lightly, you’ll be well on your way to reaching your financial goals in no time!

  1. Jess

    This is great! So much better than paper and pencil writing it all out

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