How to Create a Budget from Scratch, by Rachel Cruze on YouTube. 8 min 20 s.
- Video length
- 8 min 20 s
- Time to do it
- 30 minutes
- Difficulty
- Easy
- Steps
- 7
What you need
Steps
Gather your income records, including pay stubs, side gig payments, and any other money you receive. Add them up to find your total monthly take-home pay.
List every monthly expense from your bank and card statements. Split them into fixed costs like rent and insurance, and variable costs like groceries and gas.
Subtract your total expenses from your total income. If the result is negative, look for expenses to cut. If positive, decide where the extra money should go.
Choose budget categories that match your life, such as housing, food, transport, debt, and savings. Assign a dollar amount to each category based on your spending history.
Try a zero-based budget: give every dollar a job so income minus expenses equals zero. This includes setting aside money for savings and debt payments.
Track your spending during the month using an app, spreadsheet, or notebook. Compare what you planned to spend with what you actually spend.
At the end of the month, review your budget. Adjust category amounts for next month based on what worked and what did not.
Tips and common mistakes
Base your first budget on your actual spending from the last two months, not on ideal numbers, so it is realistic.
Include irregular costs like car repairs, gifts, and annual subscriptions by saving a small amount each month.
Check your budget weekly to catch overspending early and move money between categories if needed.
If your income changes, budget using your lowest expected monthly income and treat extra money as a bonus.
Questions
What if my income changes every month?
Budget using your lowest expected income for the month. When extra money comes in, assign it to savings or debt rather than new spending.
Do I need a budgeting app?
No. A spreadsheet or paper works fine. Apps can make tracking easier and often connect to your bank accounts.
How much should I put toward savings?
Start with any amount you can afford, even $20. Aim to build an emergency fund of three to six months of expenses over time.
This guide was drafted from the video's details and general task knowledge. It has not been checked against the full video. Check the video and relevant product instructions before following a procedure. Report a correction.
