How To Create A Budget: 4 Easy Steps

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“There’s too much month at the end of the money”

If this resonates with you and made you laugh just a little, then you’re in the right spot.

When I first heard this quote, I chuckled too because this is how I felt living paycheck to paycheck and using credit cards to supplement the lifestyle I was living.

If I was hungry after a long day of work…..Swipe! “Don’t worry sweetie I’ll pick up dinner so you don’t have to cook and we can relax and binge watch Netflix.”

If we saw a cool movie trailer…..Double Swipe! “Ok. Got our tickets. Let’s get two large sodas and a extra large popcorn!”

You might be thinking to yourself, “Well that doesn’t seem to bad.”

And I would agree…..but my bank account and credit card bills would have said something totally different.

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Over My Limits

When these statements would come in, I wouldn’t look at them because I had most of my payments on autopay. For my credit cards, I was only paying the minimum.

One day I decided to look at my statement as I was shredding papers in my home office (I may have also built a house with a home office because why not? It fit my spending habits lol).

When I looked at the statement, I about spit out my coffee when I saw the balance.

I had one of those nervous laugh “Oh shit!” type of moments.

I thought to myself, how in the world could my balance get that high. I mean most of my purchases were literally food and entertainment here and there.

So I decided to read through my statement for one month and added up the total amounts I was spending.

$1,500 on food (eating out) alone!

I then had another one of those nervous laugh “Oh shit!” moments.

About that time my wife walked into the office to see what I was doing. So I told her I was just going through the statements before shredding them.

Then she asks, “So how are we doing financially?”

With a nervous sweat I responded, “Oh, we’re doing pretty good!”

And then she left the office, because she trusted me to take care of our finances.

I mean, I am half Asian so math was supposed to easy for me, right? Lol.

Well…..apparently I’m only half as good at math lol. Makes sense now that I think about it.

Whataburger, Barbecue, and Tacos

So I decided to do a little more digging and looked back at a couple more months to calculate my spending habits to see if the $1,500 on eating out was just a fluke.


Sure as shit. We were spending $1,500 alone on eating out. The three main culprits were Whataburger, barbecue, and tacos. People from Texas will know this struggle lol.

I love food, but this was a bit of a problem.

It was at this point that I had my “Come to Jesus” moment that I explained in my other post (click here to check it out if you haven’t already).

I needed to fix this issue, as you are probably saying to yourself right now.

But how was I going to do this?

I didn’t know how to set up a budget.

And then I remembered one of the books I had read before, Rich Dad Poor Dad by Robert Kiyosaki (If you haven’t read this book, I highly recommend it. Click here to find a copy on Amazon).

In this book, one of the things he mentioned was how people should know where their money is going and provided a way to show others how to categorize them.

He even created a board game to teach people how to get out of the “Rat Race” by learning how to invest called Cashflow.

This game is like Monolopy and the game of Life on steroids.

But back to the point, which brings me to the first step.

STEP #1: Identify Income & Expenses

To do this I needed to find a template of some sort to know how to categorize my spending in more depth than what was provided by Robert Kiyosaki.

So I did what most people do these days, and I hopped on Pinterest and found a variety of budgeting templates.

I took these templates and adapted them until I found one that worked.

Now, this did take me several of months of trial and error until I finally got one that fits my needs.

I’ll save you some trouble and send you my free printable budget tracker! All you have to do is submit your email address below.

For those of you who would be interested in an electronic version of my budgeting tracker that does the calculations for you, be sure to sign up for the free printable and we will send you an email when it’s been released!

The electronic budget tracker will be available on Excel and Google Sheets. I utilize these because I like having quick access to my tracker wherever I might be, and their apps make it easy to work with.

Staying Organized

Now that I had a budget tracker to help categorize my spending, I was able to know the appropriate category for each item on my credit card and bank statements.

Your categorizes may be different, so adapt the budget tracker to best fit you!

I did this for the three previous months, just to get an idea of my spending habits and to find the average that I spent on each category.

I then calculated everything and placed it into each category on the budget tracker. By doing this, I was able to understand why I was up to my eyeballs in debt.

I was spending more money then I was bringing in each month. It’s more obvious now why I was in debt (dang food!)

New Year, New Me!

At this point in time, I made a decision to become debt free.

So back onto Pinterest I went.

I searched any and everything on how to get rid of debt.

And the concept that I kept coming across was something called Debt Snowball (you can read more about that here).

This concept was so simple to implement!

But it required me to make the conscious decision to be strict on where I spent my money each month.

This led me to the next two steps

STEP #2: Set Spending Limit For Each Category

For this step, you are just taking the average spending in each category and using it as your spending limit for each month. (The electronic budget tracker does the calculations for you! You just type in the amount)

For expenses that are fixed, meaning they don’t change significantly from month to month, it’s almost easy to calculate.

These may include mortgage/rent, insurance, vehicle payments, internet, phone, etc.

For expenses that do fluctuate from month to month (referred to as variable expenses), you will have to determine what your average spending for these are in order to set a limit.

These types of items might include eating out, gas, groceries, or other non-typical spending like entertainment or shopping.

Once you set your limit, then try to stick to that for at least a solid month.

STEP #3: Make Adjustments

At the end of each month, I like to revisit my spending and see if I was close or if I went over.

You may notice on a category or two that the limit you set was higher than what you actually used. This is where you adjust your budget.

Staying under budget helps, especially if you’re using what money you have left after all expenses to help pay down on debts like I did!

And finally, this leads me to the next step, which is optional.

STEP #4: Find Ways To Cut Back

I looked at each category on my budget and analyzed where I could make some changes.

The first thing that I decided to do was to regain control on my spending for eating out. To do this, I had to eat more at home.

But I knew I was always going to be tired from work, so I needed a way to cook awesome tasting meals quickly.

We tried meal prepping like those disciplined athletes that only seem to post about their gym session and their meal prepping for the entire week. Got tired of that.

We tried crock pot meals. Kept forgetting to do it in the morning before work.

And then one day I came across (On Pinterest again), something called an Instant Pot.

Ladies and gentlemen……this was a game changer!

The amount of money this has saved me on my budget has been amazing!

And there are so many awesome recipes on Pinterest that I’ve created a board on ones that I have tried and ones that I created as well! (check them out here when you get a chance)

Instant Pot literally helped me cut my food budget from $1,500/month down to $500/month. That $1,000 saved per month from not eating out was then used to add to my Debt Snowball and has been helping me get debt free!

Other Ways To Cut Back

On our budget, the goal was to cut back on wasteful spending. After closely looking at each item that we were spending money on, these were the choices we decided to cut back on or look for cheaper alternatives.

  1. Switched from cable tv ($120/month) to Netflix and Hulu ($22/month combined) = SAVED $98/month
  2. Switched insurance carriers (AllState to GEICO) and literally saved 15% lol. Saved $60/month on auto and $200/year on home. Bundling helps!
  3. Reduce non-typical spending aka random purchases that don’t happen each month consistently like bills.
    • Shopping
    • Entertainment
    • Home Improvement
    • Other
    • Utilized money savings coupons on grocery shopping with iBotta.
    • Utilized money saving coupons for other items that could be purchased online with Ebates.

Like I mentioned before, the money I saved each month was then put towards paying off debt using the Debt Snowball method (learn more here).

I hope this was helpful for you! If so, please feel free to pin it and share it with others who could use some help gaining control of their finances.

Don’t forget to check out our other posts if you have a chance!

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