Making A Budget Plan From Scratch

Updated October 2025 

Making a personal budget plan has never been more important. From staying prepared for a potential layoff to reaching important financial goals, creating a budget is the first step to establishing financial security. 

Below, we will teach you how to make a budget plan from scratch using effective budget making tools to help you reach your goals.

What is a budget plan?

A budget plan is a comprehensive summary that tracks and compares your income and expenses over the course of a month. Setting up a monthly budget shows how much money you expect to make each month and compares it against your fixed and variable expenses.

Fixed expenses typically include things like your rent or mortgage, car insurance, and phone bill. Variable expenses typically include things like gas or groceries, as well as “fun money” for things like restaurants, clothing items, or non-essential shopping. 

The Importance of Starting a Budget Plan

With a monthly budget at your disposal, you can easily plan for and track how much money you will spend and save each month. This process allows you to do things like establish an emergency fund, create a savings account for a big purchase, or invest in your financial future without guesswork.

How to Make a Budget Plan: 6 Easy Steps

Getting started with a budget plan is as simple as following these 6 steps:

1. Choose your budget making tool whether it’s a simple template, an app or software.
2. Collect all your financial paperwork or electronic bill information.
3. Calculate your monthly income.
4. Establish a list of your monthly expenses.
5. Categorize your expenses and designate spending values.
6. Adjust your budget accordingly.

1. Tools to manage your budget

Get started with easy and effective budget making tools such as a premade spreadsheet in Excel or Google Sheets (many sources offer free versions), or a digital budget planner in the form of an app or software. These tools come fully equipped with fields for your income and expenses while helping you calculate your budget surplus or deficit with ease.

2. Collect financial paperwork or electronic bill information.

Once you have your budget making tool selected, it’s time to collect all your financial paperwork including:

• Bank account statements
• Paystubs and W-2s
• 1099 forms
• Mortgage or rental statements
• Utility bill statements
• Credit card statements
• Auto loan statements
• Student loan statements
• Phone bill and car insurance statements
• Childcare expenses
• And more

3. Calculate Your Monthly Income

If you’re a full-time employee and collect regular paychecks, use your net monthly income to calculate your monthly income. Have a side hustle or alternative sources of income? Don’t forget to add these to your total. If you’re a freelancer or a seasonal worker, you should base your monthly income on your lowest-earning month over the past year.

4. Establish a List of Your Monthly Expenses

After you have calculated your monthly income, it’s time to create a list of all your monthly expenses. Aside from the fixed expenses you collected in step 2, this list should include variable expenses including:

• Groceries
• Gas or public transportation fees
• Entertainment
• Restaurants
• Non-essential shopping
• And more

5. Categorize Your Expenses and Designate Spending Values

Now that you have your fixed and variable expenses documented, you can categorize them within your spreadsheet or mobile app. If your goal is to establish an emergency fund, increase your savings, or pay off a certain amount of debt, make sure to include these individual items in the fixed-expenses list of your budget.

Once your expenses are categorized, it’s time to designate spending values. Starting with your fixed expenses, make note of how much each one costs per month in the appropriate spreadsheet cell or mobile app field. For your variable expenses, make note of your 3-month spending average.

6. Adjust Your Budget Accordingly

With your expenses categorized and your spending values set, you can start to get a better idea of your financial well-being. For example, if you are making more money than what you are spending each month, you are in a good position to start setting aside money to reach your goals.

Follow the 50/30/20 budget rule. This means that 50% of your budget should account for your essential expenses, 30% should account for non-essential expenses, and 20% should account for savings and paying off debt.

If you happen to make less money than what you are spending each month, go through your budget and, wherever possible, cut back on variable expenses. This includes shopping for non-essential items, eating out or costly subscriptions.

If you are unable to balance your budget by cutting back on variable expenses, you might have to cut back on fixed expenses (i.e., moving to a place with lower rent or mortgage payments, working out at home versus a gym membership etc.) 

How to Use Your Budget

The only way your new budget will help you reach your financial goals is if you stick to it! Monitor, track, and plan for expenses in each category of your budget. Ideally, you will want to track and record your expenses daily rather than at the end of each month. This type of granular expense tracking will help you uncover any negative spending patterns you might have, as well as, help you keep track of all the purchases you make.

How to Stick to Your Budget Plan

Sticking to a budget can be a challenge, especially if this is your first time keeping track of every purchase. Rather than feeling overwhelmed, just remember that the purpose of your budget is to help you reach your long-term financial goals. A few things to remember:

• Think Deeply About Big Purchases – Feel like splurging? Rather than making a snap decision and falling behind in your monthly budget, take some time to think about it. Is it a necessity in your daily life? Does the value outweigh the financial stress it could cause?
• Avoid Going Into Credit Card Debt – No matter your credit card limit, it’s important to avoid going into debt whenever you can. If you make a big purchase on your credit card but you don’t have enough money to pay it off at the end of the month, you will spend more on interest alone. Instead, set up savings plans for the big-ticket items you want.

Take Control of Your Finances with a Comprehensive Budget Plan

When it comes to taking control of your finances, establishing a budget is the first step. With a monthly budget handy, you can monitor what you are spending and saving closely—and that gives you the chance to reach your long-term financial goals faster.

If you’re ready to make a budget plan, you need a bank that makes it easy to access and keep track of your finances. At Landmark National Bank, our personal checking accounts, online banking tools give you the flexibility to manage your money no matter where you’re at. Other calculators are also available to help you balance your budget. Discover how we can streamline your budget plan with Landmark today!