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“Oh no! Another bill to pay! – how can I count my expenditures”

How to create a budget? - Step by step

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You don’t need advanced tools to plan and control your expenses. People often look for different excuses (it is too difficult, it takes too much time, I do not know how to go about it, I have no financial knowledge, etc.). However, creating a budget is really easy! Of course, the more accurate we are, the better results we can achieve. Our approach is important, but the creation of a budget can be based on five stages.

Instruction in 5 easy steps:

  1. Prepare a budget management sheet

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You can prepare it yourself or download it ready. Nowadays, there are many tools that are worth using in order not to be discouraged in the first step. You need to think about whether you want to keep a budget with a computer, a phone or manual notes. The form is not important, but it is important that the sheet is simple, clear, tailored to your needs and expectations and as comfortable as possible for you. Our proposal is to create a table in Excel so that calculations can be done automatically. However, in [the Tools] section you will find more possibilities.

  1. tablish and record all your income in a table

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When determining the income for a given month, add the money from all sources together. For more information about income, see [Module 1]. In this step, don’t take into account your savings, which you want to spend on a different purpose than everyday living.

  1. Create appropriate categories for expenditure try to estimate their value

The expenditure category shall be divided into subcategories. Consider which categories of expenditure to include in your budget plan so that they cover all expenditure and are not too general or too detailed. They must give a clear picture of what you’re spending your money on. Too detailed categories discourage, make a mess and create difficulty in writing. In the table you can see a proposal to divide expenses into categories. Several categories have subcategories to allow better control of finances. Of course, you can change them and choose only those that apply to you.

  1. Plan your savings

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Before you decide how much money to spend on savings, think about your plans, what your goals are. It is worth writing them out on a separate sheet of paper or on a separate spreadsheet. It will motivate you to save. The objectives can be divided into long-term (e.g. purchase of a flat, renovation) and short-term (e.g. dream holidays, buy a cool gadget). Next to the target, write down the estimated amount you will need. At the end, it is best to sum up all the amounts and divide them into the number of months during which you want to save the amount you need. You will then receive an amount of money that you should save every month to achieve your goal/fulfil your dreams.

However, you must remember that there may be a situation where your expenses in a given month will be so high that you will have to reduce your savings, or you will not even manage to save anything in that month. Then you should go back to the list and consider whether your goals are achievable, but whether you should give up something or postpone it.

  1. Record all expenses incurred (as per receipts, invoices, bills)

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In this step it is very important to collect all receipts, bills, invoices. You can do this on an ongoing basis and then you can be sure that you haven’t missed anything and even if you forget to take a receipt or lose it, you can remember its value. If you find that regularity will discourage you too much and it is inconvenient for you, you can choose one day at the end of the month and enter all the expenses from that period. The choice is yours! However, you must remember that in the 2nd case you must necessarily collect receipts/accounts e.g. to one folder, and if you pay with a card or make a transfer, enter your account history and check your expenses for the month.