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Budgeting 101: How To Build A Budget (You Can Actually Stick To)

“We must consult our means rather than our wishes.” ― George Washington

"A budget is telling your money where to go instead of wondering where it went" - Dave Ramsey


Budgeting or cash flow planning is a fundamental life skill that absolutely everyone needs, kind of like breathing. This post addresses the "why", the "what" and the "how" of starting a basic budget (also known as “budgeting 101”). 

It’s my personal and professional conviction that budgeting and personal finance is something that should absolutely be taught in our public schools. It’s always puzzled me that it’s not. I truly believe that, had I been taught how to properly budget in my more formative years, I would have avoided the $43,000 of consumer debt (and consequent anguish) I got myself into about a decade ago. 

After having climbed out of that hole (it took 2.5 years) and now having coached students for over a decade, it’s my strong assertion that basic budgeting skills are absolutely necessary as part of any kind of personal financial literacy. 


Do you want the free downloadable PDF guide of this material?


But alas, we can’t simply rely on public (or private) institutions to teach our children how it’s done. Budgeting skills MUST be initiated in the home. And to be able to teach it effectively, we must both know it and practice it ourselves.

So, we created this resource to help you, no matter where you are long the continuum of learning how to budget:

1) total beginner,

2) some experience, but need more help/development,

3) tried, failed and gave up or

4) never even considered it until a life circumstance dictated it absolutely necessary to get on a budget.

I can promise you that, if you commit to the process, learning how to budget will immediately change the trajectory of your finances and your life for the better! Ready to become a budgeting nerd?


This post is going to focus on 3 areas:

1) organizing your finances (the pre-budgeting process),

2) putting those organized finances into a written budget and

3) developing the habit of tracking expenses (this makes it SO much easier to stick to your new budget).


Let’s Address “Why”, “What” and “How”


Why a budget?

“Why” depends on what you’re trying to accomplish with your finances. Do you want control over your money? Do you want more financial success? Do you want to eliminate debt? Do you want to retire (or even retire early? If the answers to ANY of these questions is yes, then you must get on a written budget. 

I’ll unpack this more later in the post, but a budget or cash flow plan will become the "external brain" for your finances. Our financial lives are far too complicated and detailed to try to organize, edit and store in our noggins. We need to externalize so that we can get control.


What is a budget?

What is a budget? Simply put, it’s a plan for your household cash flow. You’re telling every piece of currency that flows into your household what to do. You’re giving it a name and a specific job to do. That’s a budget. I’ll be unpacking this idea much more thoroughly later in the post as well.


How do you budget?

We’re going to walk through step by step, the “how to” write a budget. So, whether you’ve never tried or you’ve tried and failed, this guide will help you to successfully claim that you’re now a newly minted budgeting nerd. :)


Two key ideas to keep in mind:

  1. No one is a “born budgeter”. It's a skill that can absolutely be acquired.
  2. You must write your budget on paper for the first 90 days if you really want to become a successful budgeter.


No One Is A “Born Budgeter”

Cute? Unquestionably, yes. A budgeter? Well, not just yet... 


No matter where you are along that continuum, the fundamentals of budgeting are the same and they can be learned, period. Just know that if you’ve been frustrated in the past, it’s normal. There’s a tendency to think that some people are “born budgeters” or that some people just have the “talent”.

Let me assure you that, after having learned budgeting myself and having taught it to thousands of students over the past decade, there is no such thing as “talent” for budgeting. No, budgeting is absolutely a skill and one that can be learned by anyone, no matter how many times they’ve tried and failed in the past.

The key is to have a “why” and a strong desire for learning it, a process for acquiring the skill and resources in place to help you get unstuck when you’re stuck and to encourage you when you feel like a failure.

And be warned, you will almost certainly feel like an utter failure at first. Over the past decade, we’ve witnessed consistently that this process takes about 90 days of concentrated effort to garner success. So, be patient with yourself and get help if/when you need it.

To illustrate, the process usually goes something like this:


This is what it looks like in almost every case. Hang in there, it will get awesome, I promise!


Month 1: Controlled demolition.

You get started, but the chaos is overwhelming to the point of being almost unbearable. This is where many walk away. It’s tough to get organized and then, once you are there’s going to be stuff you forget. It’s normal. It’s natural. Resolve to “fail forward” and to not quitting and you’ll be alright.


Month 2: Some wins, coupled with an almost equal amount of frustrations.

You’ve got some training wheels, but still manage a few crashes. It’s okay, keep going, it’s going to get better. :) Month two may sometimes be more frustrating than month one if only because you’ve tasted some wins. The setbacks and shortcomings will pass. Just stay in the game and you’ll be golden.


Month 3: It all starts coming together.

“Man, I can really see myself getting good at this!” At this point, you’ve made most of the mistakes you’re going to make and you’ve probably experienced some great consistency. If you’re feeling confident enough, you could even consider pivoting to an “app” or “spreadsheet” for month 4’s budget. But be warned, you might want to wait and just do it on paper for a few more months.


On Paper For The First 90 Days

Paper, paper, paper. 


I often get the sideways, neck tilted, puzzled look from new students on this one, like I’m a relic from the stone age brought back to life by some chocolate and strong smelling salts. “But, why, dude?”, is usually what it signifies. It’s a fair question, so let me explain.

Maybe you’ve tried in the past to learn budgeting using an app or a spreadsheet.

There’s such a temptation to just go download the latest “app” thinking that it will be the ready-made answer to solving your money problems. Heck they’re even marketed that way and who could blame them. 

I mean, it sounds positively delicious, right? “At last! Get control of your money, inside this life-changing, wealth-building, finance-altering” budgeting app” (of course, this is an exaggeration, but not far off…).

The problem with learning how to budget as a skill is that it’s a giant beast of task for most of us to begin with. When you layer trying to learn an app or navigate a spreadsheet you multiply the level of complexity to a space far beyond what most of us mere mortals can tolerate.



The result is usually complete demoralization and abandonment of the process altogether.

I don’t want that for you. I want for you to succeed and to get control over your finances in a way that’s both realistic and sustainable in such a way that it becomes a lifelong habit.

This is why I recommend you start your budgeting journey on paper, at least for the first 90 days. If, after this first 90 day cycle, you’ve developed the skill to a degree where you feel comfortable moving your budget into an app or spreadsheet, then great. But I long for your success, and the best way to do that is to commit it to paper for the first three months.

And just to make it as easy as possible for you, here’s the perfect little downloadable budgeting printable for you to use.


Alright, let’s next talk about the 3 steps to your newfound bulletproof budget: 

1) organizing your finances (the pre-budgeting process), 

2) putting those organized finances into a written budget and 

3) developing the habit of tracking expenses (this makes it SO much easier to stick to your new budget).


Step 1: Organize Your Finances (Pre-Budgeting Step) 

It's probably going to feel like this at first. Stick with me and I assure you it WILL get better.


Typically, anything having to do with budgeting or personal finance can just be completely overwhelming for most of us. Because of that, it’s super important to break things down into micro-steps.

That’s precisely why we do a “pre-budget" step with our new budgeters. We’re breaking this overwhelming budgeting process down into more bite-sized pieces. And this is how you preempt any “budget overwhelm”. 

This initial organization process may take some time, depending on how disorganized your finances are. So, mentally prepare for that and give yourself some grace if it takes longer than you expect. You’re doing a great thing just by sticking with it, I promise.

And try to keep in mind that, throughout this entire budgeting process, overwhelm is your sworn enemy. So we want to either slay it or just avoid it as much as possible. Sidestepping that panicked and well, feeling of being overwhelmed will keep you engaged and get you to success.

To help you combat it, I have a whole piece of content The Forgotten Budgeting Step (aka Budgeting Success Insurance) (with a free downloadable printable PDF) outlines this pre-budgeting step in granular detail. I really think you’ll find it helpful and comforting. 


Here's the link to download the PDF: The Forgotten Budgeting Step (aka "Budget Insurance") Downloadable PDF

OR you can the image below:

The Forgotten Budgeting Step

To keep us moving ahead, here are the steps in a simple list. Be sure to see the guide for more granularity (and less overwhelm).


How To “Pre-Budget”  (i.e. make a list of all bills, expenses and debts)

1. Take a deep breath. Again, depending on how organized/disorganized you are, this might take more than one sitting. I recommend using our 25 Minute Time Block Strategy resource if you start to feel overwhelmed.

2. Gather all of your materials including the "Everything I Owe" PDF Worksheet". That printable form looks like this:

3. Write them all out in your "Everything I Owe" PDF Worksheet making sure to include the bill due date.

4. PRO STEP: Now that you’ve “brainstormed”, go back and rewrite all of your bills, expenses and debts in order of due date and/or write them out on a monthly calendar.

5. NOW, you’re ready to put all of those bills, expenses and debts into a written budget.


If you learn better by video, here's a step-by-step outline of the process for you.


Here's a "livestream"  session I did that walks you through this process in the context of the 2020 financial crisis.

 Okay! On to the actual budget!


Step 2: Create Your Written Budget


Now, let’s do some budgeting.

Using the “Everything I Owe” form from above,, let’s go ahead and create your very first (or maybe latest) written budget. But before we jump in, let’s talk about the “what” and the why”. Then we’ll jump straight into the “how”.


What exactly is a budget? 

Have you ever asked yourself that? I know it seems self-evident, but I want to more concretely define what one is as we’re diving in.

A budget is really nothing more than a written cash flow plan. You’re committing to paper (at least for the first 3 months) how cash is flowing into and flowing out of your household. You’re giving every single penny that comes into your household a name and a job, so that  you can exert more control and ultimately have more of it to give, save, pay off debt and invest.

So conceptually, it’s easy to understand. The difficult part is behaving your way toward successful budgeting. We’ll definitely get to that in just a minute.


Why do you need a budget/cash flow plan? 

Our financial lives are complicated and extremely detailed and no one can hold all of that information in their brain. You MUST externalize your cash flows.

Think about it. How many transactions do you conduct on a daily, weekly and monthly basis? I would guess it’s probably a hundred or more, especially when you count all the micro transactions and online purchases. How in the world could anyone remember all of that?

Now think about all the “mental math” you have to do to calculate how much you have left in your bank account, savings account, etc. It’s just not possible. If you want to win with money, you’ve GOT to externalize that.



So like I mentioned earlier, you can think of your budget as your “external brain”, a concept I’ve borrowed from “Getting Things Done”, which is a phenomenal personal development/productivity resource by David Allen. 

Your budget will now externalize all of those transactions and complicated calculations so that you don’t have to try to  document, track and reconcile that overwhelming pile of numbers in your sweet little noggin’.


How do you do it?

First, you have to decide, “I’m doing this.” Once you’ve made the decision that you’re “in”, no matter what, there's an internal shift that happens that will pull you through the process. It’s pretty awesome and I’ve seen it thousands of times.

Next,  you’ll need a budgeting form, which you can go grab here, download and print out.

Now, using the “Everything I Owe” worksheet from above, we’ll begin to fill in the spreadsheet.

If you want to “look over my shoulder” as I do a full written budget, you can see that in this video below:


Micro-Step 1: Add Up All Income

Fill in your total income in the upper right hand column.

This will include all income from employment, businesses, child-support, alimony, etc. If it’s cash flowing in, we want to account for it here.

I’ve got a free printable form you can download for that, too:

Micro-Step 2: “First Pass”

Now, using your “Everything I Owe” form from above, do a first pass from memory and try to fill in as many categories as you can remember. Don’t worry, you’re going to have to go back and make changes and add things as  you go along. Try to have patience here, this could start to get a little tedious and frustrating.

Back on the budgeting form, I would start with the “Actually Spent” column first. We’ll use this first month’s actual expenses to plan for the “Budgeted” column in next month’s budget..

Again, remember the “90 day” rule I mentioned earlier. This is probably going to feel very disorganized and disjointed these first couple of months. Just keep that in mind and that we’re going for progress, not perfection.

Heck, the fact that you’re even doing this is huge! So, celebrate every small win like that.



Micro-Step 3: "Second Pass"

Do a second pass and try to fill in as much of what you missed during the first pass.

Again, here are some things to keep in mind. 

  1. There will likely be irregular expenses that you forget at first.
  2. We’re looking for progress not perfection here.
  3. There is no such thing as rewriting too often.
  4. Accountability and guidance are precious, especially when you’re starting out. Budget meetings and coaching are always good ideas. 

If you want even more granularity here, check out this post: How To Start Budgeting When You're Terrible At It (Zero Based Budget)


Micro-Step 4: Rewrite, Rewrite, Rewrite

Again, there is no such thing as rewriting too often. I would say at least weekly and at least in conjunction with your budgeting meeting with your spouse, accountability partner and/or coach.

The more you internalize these numbers, the more quickly you’re going to be a total budgeting nerd  (and I really want for you to be).

For more of a deep dive into all the reasons to rewrite your budget, check out this post: 4 Not-So-Obvious Reasons To Rewrite Your Budget Every Month


Step 3: Expense Tracking


If you want to really win with budgeting and with your finances in general, make it easier on yourself and start tracking every single penny of expenses. Tedious? Yes possibly, at first. But I can attest that even after budgeting successfully for over a decade, this practice has dramatically increased my wife’s and my trajectory toward financial independence.

I just can’t say enough about the combined activities of budgeting and diligent expense tracking have on your overall awareness about your money. The two in tandem are a game changer.

And like the pre-budgeting step, diligent expense tracking is a form of “budget insurance”. Alongside your written budget, this will help you to reign in  your finances and find “budget leakages”, in a way that will help you to feel like you’ve gotten a raise even if you technically haven’t (yet).

So, whether you’re seeking more control over your money, to eliminate debt, or to save for a big goal (i.e. house, car, college, retirement), budgeting will help you to both 1) benchmark your progress and, (when done consistently) 2) give you as sense of accomplishment and progress toward your goals.


Why track every single penny?

Two reasons: 1) it helps to shorten the overall budgeting learning curve and 2) it gives any unsavory financial habits “no place to hide”. Let’s unpack these two.


Shortened Learning Curve

Expense tracking will greatly shorten the learning curve in your budgeting efforts. How? It will make you more acutely aware of every single penny that comes in and every penny that goes out. And that awareness will naturally start making you more conscious of your money moves, for better or for worse. 

As a natural result, you’ll start to see a change in your attitudes toward spending in a way you never could in your “pre-tracking” days.

Test me here. Try it for 30 days and let me know your results.

For more about the "why" of budgeting and expense tracking, check out this post: You Have Full Permission To Be A Colossal Budgeting Nerd


No Place To Hide

If you have bad financial habits and you want to change them, then both budgeting and expense tracking, when done honestly, will absolutely help you. Tracking your every penny of expenses will very quickly shed light on when, where and how you spend. 

If you ever want to get control of your finances, you’ve got to eliminate all the places you’ve been hiding.

For more ideas on how to give yourself "no place to hide", check out this post: How To Destroy Debt By Giving Yourself No Place To Hide


Free Expense Tracker

Here’s a free expense/receipt tracking resource you can use to track your expenses. Make a commitment to take it with you and use it as a financial journal for 30 days. I promise you’ll be surprised at how quickly it will become a habit that will serve you well for many many years to come. 

This tracking process will absolutely supercharge your financial health. Again, this is all about awareness and control. You’re using your budget and tracking vehicles as your “external brain”, rather than trying to keep everything top of mind. Our financial lives are WAY too complicated and detailed for that.

All of this organization, categorization and tracking will help you to sleep better at night. With everything externalized and accounted for, you can relax and breathe much more easily.


Conclusion & Call To Action


So, in this post I’ve laid out a strong case for you to get on a written budget. No matter where you are in your financial journey, budgeting will both correct your directional errors and elevate your finances to a whole other trajectory.


By way of review, we’ve focused on 3 areas: 

1) organizing your finances (the pre-budgeting process, 

2) putting those organized finances into a written budget and 

3) developing the habit of tracking expenses (this makes it SO much easier to stick to your new budget).


Do you "get down" with Pinterest? Would you consider pinning this to your favorite board?


Remember that, no matter where you are on the budgeting learning curve, it’s going to take about 90 days of consistent effort for you to feel like you’ve constructed some competency.

Again, the process will likely look something like this:


Month 1: Controlled demolition. 

Month 2: Some wins, coupled with an almost equal amount of frustrations..

Month 3: It all starts coming together. 



And now that we’ve outlined the why, what and how, where do you see yourself in your financial posture and how might budgeting help you?


What To Do Next

Now that you have that as a basic framework for budgeting, the next step is to get as granular as possible with the rest of your financial life. I want to offer you another completely free resource that will help you map out your money with even more confidence.


Ready to get total control over your money? Introducing My FREE 8 Steps To Erase Debt Guide

These are the steps I personally followed to obliterate $43,000+ of debt in 2.5 years

Maybe your number is bigger, maybe it’s smaller. Either way the principles are the same and I want you to have them.

  1. Stop All Retirement Investing (Until Step 4)
  2. Build A Budget
  3. Starter Emergency Fund of $1000
  4. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)
  5. Full Emergency Fund of 3-6+ Months’ Expenses
  6. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)
  7. College Funding (if applicable)
  8. Pay Off The Home Mortgage
  9. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!

I’ve created a simple, easy to follow “8 Steps To Erase Debt” guide that you can use as your foundation as you navigate the absolute annihilation of your debt forever. 


Here are some additional options to help you accomplish your personal finance goals:

  1. Check out our YouTube Channel for "how to" video guides.
  2. Join our Zero Debt Tribe Community on Facebook, a group of friendly, like-minded personal finance enthusiasts, budgeting nerds, debt-eliminators and “FI-ers” who are there to help each other succeed? Click here to request to join for support and encouragement!
  3. Our library of Free Products & Printables.


What do you need help with the most right now?

And finally, I want to encourage you and challenge you to get started in this process. You can do this by downloading this blogpost as your guide. The downloadable pdf contains all the printable forms and instructions you need to get this process started.

So, I’d LOVE to hear from you. The biggest compliment you can give me as your coach is to share your progress and your takeaways in the comments below.

I wish you nothing but great success in your personal finance endeavors and please let me know how I can help you accomplish your goals.

To your freedom,


Your Virtual Money Coach

[email protected]

This post may contain affiliate links. If you click & make a purchase, I receive a small commission (at no extra cost to you) that helps keep Zero Debt Coach up and running. Read my full disclosure policy.


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