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How to start budgeting, your step by step guide

Updated: Feb 10, 2021

I recently had a great conversation with a friend of mine, and subscriber to the blog, about the content of our site. He told me that you can't have a good personal finance website and not talk about budgeting. While I'm not a huge proponent of full-fledged budgeting myself, he had a point. Anytime I'm looking around for new content related to personal finance I always come across something related to budgeting so his comments made sense. Heck, I've even reviewed a few budgeting apps already (Monarch Money, Personal Capital, PocketSmith). Because of this conversation and his feedback I thought I'd conduct some research and see what I could find out about how to start budgeting.

How to start budgeting

Budgeting is a non-trivial task! It takes dedication and effort to ensure you know where your money is going and why. This is why I don't personally like budgeting in its traditional definition. I like to take a more muted approach by reviewing finances every month (or three) to ensure our family is on the right track. That approach is certainly not for everyone. Therefore, read on to learn more about other, more granular, approaches to budgeting.

Budgeting Apps

For those that are more interested in tracking their budget more closely, you can start on your own or you can take a look here, here, or here. Each of those tools will help you set up a budget. Monarch Money and PocketSmith will cost you a few bucks each month, but if you are dedicated to setting up a budget you should check them out.

Creating your own budget

Because I've spent my whole career working within Microsoft Excel I created our "budget" using this tool. It was pretty simple and there are ways to make it so basic that it doesn't even feel like work. Anyone that doesn't have access to Excel can absolutely set up the same budgeting system with Google Sheets. Google Sheets and Excel actually offers an awesome monthly budget sheet that makes building a budget super easy.

Budgeting Basics

There are a ton of "methods" out there for budgeting your income vs your expenses.

  • 50/30/20 - this article includes a 50/30/20 calculator

  • Line Item

  • Pay Yourself First

  • Zero-Sum

  • Proportional

  • Envelope

  • Activity-Based

  • and many more

Whatever your desired approach the goal is the same, ensure the money you are spending is less than the money you are making. Ensuring that the difference goes into some type of savings (401k, savings account, stocks, CDs, etc.).


There are so many ways to tackle budgeting. I suggest you try out a few approaches to find the one that works best for you. Be it free software, software you pay for, or excel docs just find something that helps you know where your money is going and how much you have to spend each month.

I'd love to hear more about your budgeting process, what has/hasn't worked for you, or where your budgeting journey is. I'm looking for more information on other folks experience with the budgeting process.

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