How To Make Your First Budget (At Any Income), by The Financial Diet on YouTube. 10 min 16 s.
- Video length
- 10 min 16 s
- Time to do it
- 30 minutes
- Difficulty
- Easy
- Steps
- 7
What you need
Steps
Write down your total monthly take-home income after tax. Include every regular source, such as wages, tips, freelance work and any benefits.
List your fixed costs for the month: rent, utilities, phone, insurance, loan payments and subscriptions. Use last month's statements so the numbers are real.
Add variable costs like groceries, transport, eating out and personal care. Look back at two or three months to get an average for each.
Subtract all expenses from your income. If the result is negative, find the biggest variable costs and cut them first.
Set targets using the 50/20/30 rule: about 50 percent of income for needs, 20 percent for savings and debt payoff, and 30 percent for wants. Adjust the split to fit your income.
Put the numbers into a spreadsheet with one column for planned spending and one for actual spending. Update the actual column as you spend.
Review the budget at the end of the month. Move any leftover money to savings and change next month's targets where you went over.
Tips and common mistakes
Start with the money you actually have, not an ideal income you hope to earn.
Round every figure to the nearest pound or dollar to keep the budget quick to update.
Build a small buffer line for surprise costs so one bill does not break the whole plan.
Check your budget once a week for five minutes instead of waiting until month end.
Questions
What if my income changes every month?
Budget from your lowest recent month and treat extra income as a bonus. Put any surplus toward savings or debt rather than raising your regular spending.
Do I need a spreadsheet?
No. A notebook with the same columns works fine. A spreadsheet just makes the totals and updates faster.
How much should I save each month?
A common starting target is 20 percent of income, but any amount you can keep is a good start. Build up to it as your budget settles.
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.
