How Setup a Budget (that actually works!) in 9 Easy Steps (1).png

Oh hey there! Happy Thursday :) Hope you are having a fabulous week!

Today I want to run through how to setup a budgeting plan in 9 easy steps. If you are new to budgeting, need a refresher or don’t know where to start, this is for you! It’s also for you if you’ve started a budget before but haven’t gotten very far when it comes to actually implementing it (been there done that!)

Setup a Budget (that actually works!) in 9 Easy Steps

Step 1) Define your goals

What do you want out of the next year, 5 years, 10 years etc? Maybe you want to do more traveling, buy a home, pay off debt, or retire early. This part is all about outlining what your short-, medium- and long- term goals are. Also - WRITE THEM DOWN! Goals that are written down are much more obtainable. :)

Step 2) Understand your priorities

Now that you’ve got your goals outlined, what are your priorities? Is it travel? Family? Home? Coffee? Food? Music? Again WRITE DOWN 3-5 of your priorities. This will help when you start analyzing your spending and determining if it is in alignment with these priorities.

Step 4) Get to know your NET income

Net income is everything you make after all taxes and deductions are taken out. If you are a W2 employee then this will be your take home pay. If you are self-employed it will be what is left over after you’ve accounted for all taxes etc.

Step 5) Go through all of your fixed expenses

Start a list (or even better, put it into a spreadsheet!) of all your fixed expenses. These are all the things you pay that stay the same each month (or relatively so!). A lot of times these are things that you auto-pay such as mortgage/rent, utilities, car payments, insurance (including auto, home and life), subscription services, loan payments, and cable/internet. Once you have all of these down, total them up and subtract from your MONTHLY net income.

Step 6) Set variable spending targets

Once you’ve subtracted out your fixed expenses from your net income, the remaining amount is what you have left to spend on discretionary or variable expenses. These are expenses that fluctuate from month to month such as groceries, dining out, entertainment, shopping, etc. Make a row for each and determine what your target amount for each is. When you add up each of these categories, you should not have exceeded the amount you had left over after you subtracted out fixed expenses. These targets can and will change. I don’t know ANYONE who sticks to their budget 100% and thus it’s important to keep an open-mind when creating these targets.

Step 7) Automate what you can

If you haven’t already, pay as many of your fixed expenses on auto-payment. This will save you time and energy from having to write out or log in and pay bills each month. It also will prevent you from missing any payments!

Step 8) Use an online spending tracking system

Being you have spending targets that should not exceed the amount you have left over after paying bills (unless you plan on always spending more than you make - which I don’t recommend ever!) it’s important to know where you are each month when it comes to your discretionary spending. Being most of us hardly every balance a checkbook anymore (sorry mom!) I highly recommend linking your accounts to something like Mint (my personal fav!) so you can keep track of what you’re spending and on what. It’s free and gives you a great rundown of what you’ve spent on which categories which I love. :)

Step 9) Analyze your spending

After a month or so worth of using your new budgeting system, take a look at your spending and determine if it’s aligned with your goals and priorities. If you say you want to pay down debt but are eating out for lunch every day, is debt payoff really a priority? See if what you’re spending your money on matches up with your goals and priorities, and re-evaluate how you want to spend your money moving forward. This can apply to both fixed and variable spending.

Alright - those are the 9 easy steps to setting up a budget! What did you think? Was this helpful? Please let me know in the comments if so.

One last note: Budgeting is like dieting. If you go all-in and deprive yourself of anything enjoyable, you will overeat (or overspend!). The best way to go about both of these is making small incremental changes that will add up to a lot of progress over time.

If you have any questions about setting up your own budget or know you need help, email me at

Until next time…

Cheers to your abundance!

Katie O.