How to Create a Monthly Working Budget

By Tamon

After a month’s payout, and with our monthly income in our wallets, the next thing that comes in is how to spend it wisely. The keyword here is “wisely”. How do we spend our income wisely? This is where many go wrong. “Wisely” in this case means balancing our expenditure to our income. If we spend more than our income, we risk entangling ourselves in a web of debts, and if we spend less than our income, we may have more to invest but we may not also live the lifestyle we so desire. Therefore, where are we to make the balance? This is where the idea of a monthly budget planner comes in.   

What is budgeting? What is a budget? What is a monthly budget planner? How can one create a budget that really works? How can we make a monthly budget worksheet or a budget spreadsheet? What are the benefits of a monthly budget planner? This article is design to provide answers to these questions and many others.    


What is Budgeting and what is a Budget?

Budgeting is the process of creating a plan (usually monthly plan) to spend your income (money). Creating a spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.

This spending plan is what is known as a budget and since its best done on a monthly bases using excel, it is often refer to as a monthly budget worksheet or budget spreadsheet. A spending plan (budget) allows you to determine in advance whether you will have enough money to do the things you need or want to do. A budget planner is a great way to take control of your finances and save for some goal or maybe just get out of debt.

Many people don't realize that they spend more than their earnings and slowly sink deeper into debt every month. If you spend more than you earn, you may have to borrow to fill the gap. As such, more of your income at the end of the month goes to repaying the debts. You may have to keep borrowing to maintain your lifestyle with the end result being all your income going to pay for debts with nothing left. In such situation, you risk entangling yourself in a web of debts which may be very difficult to come out of it.

Budgeting helps to balance your expenses with your income and help prevent you from debts or get you out of debts.


How to plan a monthly budget that you'll actually stick to it

The key here is to identify and understand the various budget techniques and figure out which one is the best fit. It's also important to realize that it won't always be easy to stick to your budget, but you can't give up.

Base Expenses and Income on Reality

Get a clean sheet of paper and list everything you spent money on in the past 3 - 6 months. This might be a tedious exercise but it’s worth the extra effort. Writing down only expenses and income from one month ago, won't give you the entire picture. By doing this, you may not be able to take into consideration transactions that only happen on a quarterly or seasonal basis, such as income bonuses at work, getting your car's oil changed, or Christmas festivities.

Remember that you are drawing your own budget plan so your budget plans to be as accurate as possible. You have to be honest with yourself, don't leave anything out and make sure you actually stick to your monthly spending goals. To achieve this, you have to base your budget on reality using the correct figures.

Chose a Customized Plan

There are different types of budgets and spending plans, thus choosing the right one is important. You may have to test a few out for a couple of months to be able to decide on the one type that works best for your family. Below are some of the most popular types:

Fixed and variable expenses budget: This technique divides your budget into two main categories, the fixed and the variable expenses. The fixed expenses such as car insurance or mortgage payment can only be lower so much, but variable expenses, such as eating out expenses and entertainment can be cut back if needed.

The 50/30/20 rule: This rule breaks down spending into 3 categories with certain proportions. Based on the income, essential expenses (such as rent, utilities, and food) make up 50% of our spending. Unnecessary expenses (like cell phone, cable, and internet,) make up 30% of the budget, and future goals (like retirement fund, savings, and debt payments) make up the remaining 20%.

Bare bones budget: This is the type of budget planner based on your lowest possible monthly income. It is best for people who work at a commission-based job, or are self-employed. Create a plan based on absolute necessities needed for survival, with any other money considered as extra.


There are a few steps you may follow to be able to draw your monthly budget worksheet that will guide you through your spending.


Determine and State your Goals and Objectives

The first step in creating a budget that work is to set your goals. What are your financial goals and objectives?  Do you want to minimize the debt you graduate with?  Do you have debts you need to pay off?  What do you want to accomplish when you graduate or while you are in school? Are you trying to save for a house, car, a vacation, or your future?   Budgeting involves tough choices, but having stated goals make budgeting a little less painful and allows you to start planning for the future you desire.

Defining a goal is the best way to help you stick (discipline) to your budget, and it’s the best way of measuring your success or failure in meeting it.

Every financial goal should be a SMART (Specific, Measurable, Achievable, Relevant, and Time Framed) goal.

Each goal we defined may either fall in one of these three categories:

  • Short Term:      less than one year (usually monthly goals)
  • Mid-Term:        one to three years
  • Long Term:      more than five years


Example of a SMART budgeting goal

 Consider the situation where you plan to buy a car, mark Toyota Camry in three years from your monthly income.  Your research shows that you will need to save at least $4,500. You have 36 months to save for your car. This means you will need to set aside $125 each month until the end of the third year to be able to by your dream car. Your goal is:

Specific: You plan to buy a Toyota Camry car

Measurable: You know that you will need to save $4,500 to buy your car

Achievable: You will need to save as little as $125 a month to meet your goal

Relevant: Your goal is relevant to you. You need a car to ease your daily movements and transactions

Time-Framed:  Your goal has a lifespan or is achievable in a period of 3 years

To be able to identify if your goal is achievable, you may want to be sure of your exact income at the end of each month. Thus, you may have to do some calculations thus:


Determine how much money (income) you get in a month after taxes

This is the exact amount of money you take home each month after taxes and other deductions. It is also known as your net income. This consists of your paycheck, government subsidies, child support or alimony, interest earned on savings, and any income from self-employment. Include tips, side-jobs, supplementary income, investments etc. For the purpose of your budget planner, use your net pay or take home pay as your income.

Determine your expenses

Collect all the receipts for a couple of weeks or months. Identifying your monthly expenditure, for example on home bills, transportation, groceries and/or gas makes drawing your monthly budget worksheet much easier. While trying to come up with the best monthly budget planner, you may have to consider the two types of expenses.

  • Fixed Expenses: These are expenses that remain relatively stable (unchanged) from one month to another. Such will consist of things like your rent, car payment, utilities, mortgage payment, insurance, and loan payments. A fixed expense many people ignore is savings. You must pay yourself in the form of your savings account before you pay anyone else. As such, you can develop a financial "padding" to protect yourself during times of financial hardship. 
  • Variable Expenses: These are items that fluctuate (constantly changing) from one month to another. This includes things like the costs associated with dining out, clothing, entertainment, groceries, vacations, and personal care products. This will be your first area to make cut-backs if you are spending beyond your means.


Split your budget plan into basic categories

The categories may include Auto, Housing, Food, Savings, Entertainment, Clothing, Medical, and Miscellaneous. You can also organize your expenses into needs like your loan and electricity and into wants like entertainment and clothing.


List all spending in each category

Let's consider a category such as Auto as an example: you may be required to spend $300/month for car payment, $100/month insurance, $200/month on gas, $55/month on maintenance, 15$/month on fees such as registration. By the end of a month, your total Auto budget would be $670/month. If you can’t determine the exact amounts you spend, use good estimates. The more accurate you are with your data, the more likely you are to keep to your budget plan.


Add up all your spending by categories

This allows you to be able to determine your total monthly spending. Compare this sum to your net income (total money you take home after the deduction of all taxes).


Determine the method to keep track of your budget

The best way is to use computer programs such as Quicken, Microsoft Money or an excel document or spreadsheet for this purpose. You may also use a good ledger book.


Set up your Page or ledger

If you are using a budget spreadsheet (which I recommend), since it already have nice rows and columns, you will just need to key in you categories on the vertical columns.  Put each main category on the first column of each section; follow by its sub categories. Multiple transaction categories, like food, are going to need lots of columns. This way, you will have much room for lots of entries in each category.


Determine how long your budget plan must last

Most people love the monthly budget worksheet. Also, short term monthly goals have a higher achievability rate compare to other goals. To me, this is useful way to get our budget planner on and working since most bills are monthly.

Key in the depositin each category at the beginning of each period, and also show all the expenditures from that category throughout the period. Using our example for Auto, you would start off with $670 for the month, and then show all the individual expenditures for gas, one expenditure for registration fee, maybe one expenditure for insurance (depending on whether you pay insurance monthly or not), and one expenditure for car payment.


Record your income and indicate the budget being subtracted from it for each period.

Making adjustments

The goal of every budget planner is to devise a balanced budget. Make sure your income must be greater than your expenses. To determine if your budget is balanced, you have to subtract the sum total of all your fixed and variable expenses from your income for each month.


The Balanced Budget: If your income is greater than or at least equal to your expenses, there is a high probability that you have been handling your finances responsibly. Your next step will be to make sure that you put your leftover funds to work for you such as investing in a business of choice. It may be tempting to spend the extra money, but as long as you have unrealized savings goals or debts, there is no such thing as "spare money." Instead, pay down your mortgage and debts, and add to your savings. 


The Unbalanced Budget: If you find yourself in a situation where you are spending more than your income, you have some serious work to do. Start by examining your variable expenses. You will have to cut down on this spending first such as cutting back on entertainment, meals out, clothing, and personal care products. If your budget is still not balance, try cutting back on fixed expenses too. For example, you can rent a room (instead of an apartment) or take on a roommate to share your bills. Or, maybe, you have to opt for a cheaper or more fuel-efficient car. Another option will be to take on a part-time job, doing overtime, switching jobs, or starting a home-based business to increase your income.


Evaluate continually:

Our financial situation is never constant but constantly changing; therefore, it is necessary to make alterations to your monthly budget worksheet from time to time. For example, if you pay off a debt, get a better pay job, or make some other life change, you have to rework your budget using your new information. And remember, debt repayment and savings are always your number one priority.


Find a Method to Track Your Budget

At this point, you know what exactly is your income, have calculated how much you spend, and divided out into a budget plan that works for your specific situation, it's time decide on how you'll track everything each month.

You may prefer carrying around a small notepad and pen to quickly jot down transactions or you may prefer to track your daily spending on a mobile app. Some of the best options are:

Microsoft's monthly budget is a free templates you can easily download Mint is a completely free mobile app and web-based service. 
You Need a Budget's desktop software.

All the above systems are based on a monthly budget worksheet like the one explain above. Again, you may have to test out a handful of different online budgeting tools, or budget spreadsheet templates, to be able to identify the one that best work for you.

Sample List of Expenses


Possible Expenses


- Rent or mortgage

- Homeowner’s or renter’s insurance

- Home warranty

- Home maintenance/repairs

- Lawn care

- Property taxes


- Car payment

- Fuel

- Auto insurance

- Tires and maintenance

- Tag/registration


- Electric bill

- Water bill

- Gas bill

- Phone bill

- Internet service

- Cable or satellite service


- Groceries

- Dining out


- Clothing

- Hair care

- Medical expenses


- Gym membership

- Vacation

- Charitable giving

- Entertainment

- Gifts



Summary of Free Monthly Budget Planner Worksheets

How to use a budget planner

A budget planner is a tool (mostly online tool or app) that enables you to itemise and document all expenses and income, as well as list and plan for future expenses.

Below is a list of all the common entries for a standard budget planner worksheet you can use online. Most (if not all) budget planners worksheet are automated meaning, they will automatically show your income and expenses and whether you have a surplus or deficit at the end of each month.


Add up all you income:

Start by entering your net income. Such as including freelance jobs, part time jobs, investments, and bonuses.

Add up your home expenses:

  • Rent/Mortgage
  • Home Insurance
  • Maintenance
  • Property Taxes

Add up your transportation expenses:

  • Car Payments
  • License & Registration
  • Car Insurance
  • Fuel
  • Maintenance
  • Bus/Transit Pass

Add up your utilities expenses:

  • Electricity
  • Gas/Heating
  • Telephone
  • Cell Phones
  • Internet
  • Television
  • Water

Add up your medical expenses:

  • Health Insurance
  • Dental
  • Prescriptions
  • Glasses & Contacts
  • Life Insurance

Add up your financial expenses:

  • Bank Fees
  • Interest Payments
  • Debt Repayment
  • Credit Card Repayment
  • Emergency Fund Savings
  • Retirement Savings
  • Income Taxes Due

Add up you variable or miscellaneous expenses:

  • Gifts
  • Entertainment
  • Vacations
  • Pets
  • Hobbies
  • Restaurants
  • Holiday Expenses

Add up your family expenses such as:

  • Childcare
  • School Supplies
  • Tuition
  • Books
  • Activities
  • Allowance


You will at the end, include your routine expenses like clothing and groceries next.

If you are using a budget spreadsheet, you will be able to see your income and expenses and whether you have a surplus or deficit at the end of each month.

If you are using a free budget planner worksheet, it will automatically show your income and expenses and whether you have a surplus or deficit at the end of each month.

Filling out this monthly budget worksheet will take some effort but when you get to see exactly where your money is going you can begin to make changes and get back on track.

You may utilize any of the free monthly budget planner worksheet to help you get your finances in order.


Benefits of a Budget

Some benefits for budgeting or planning your income and expenses include:

  • Gives you control over your money: A budget is a better way of being aware about the way you spend and save your money. It helps you to make decisions such as to sacrifice short term spending (like buying coffee everyday) for a long term benefit like buying a house or car. It also help saves the stress of suddenly having to adjust to lack of funds because you failed to initially plan on how to spend them. 
  • Keeps you aware about what is going on with your money: Budgeting gives you a clear picture on what money is coming in, and where it is going to. It saves you from wondering every end where you put your money.  Budgeting enables you to determine your financial strength, take advantage of investing and buying opportunities, and plan on how to lower your debt.
  • Keeps you focused on your money goals: Budgeting helps you avoid spending on items and services that do not contribute to attaining your financial goals. It makes it easier to make ends meet especially if you are working with limited resources.
  • Help you decide in advance how you will make your money work for you.
  • Provides you with an early warning for potential problems: when you budget, you are able to see potential money problems in advance. This way, you will be able to make adjustments to prevent them.
  • Budgeting enables you to plan for expected and unexpected costs: It allows you to plan to set aside money for emergency cost


Example of a Monthly budget planner worksheet or budget spreadsheet looks thus:


Free Monthly Budget Planner Worksheet





































































































Home Expenses:






















Home Insurance






















Property Taxes






















































Car Payments











License & Registration











Car Insurance

































Bus/Transit Pass

































































Gas/Heating Oil






















Cell Phones










































































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