These five steps will help you create and stick with a budget to save hundreds of dollars and more each month

Better personal finances is always within the top New Year’s Resolutions made and sticking to a budget tops the list of financial wishes.

By this time of year, most people have dropped their budget faster than you can say Auld Lang Syne.

Creating a budget you can keep doesn’t have to be something you do only for a few months each year. It might take a little time to get used to following a budget and it can even seem impossible at first but you’ll get into the habit fast and will save more money than you though possible.

If you’re ready to improve your personal finances and curb your spending habits, follow these five quick and easy steps to make your first budget.

1) Start with a list all sources of income

Whether it’s your first budget or your first time this year, the process of making a budget is straightforward and starts with listing out your income.

You can list out your income on a monthly basis but you may want to create a bi-weekly budget and list out the income you receive every two weeks. We’ll get to why this can help you save even more money in our bonus budget tip.

tips to make your first budgetBe sure to include any additional sources of regular income but not income you ‘plan’ on earning through odd jobs. Only list income you can be reasonably sure of earning.

2) List out your fixed expenses

A fixed expense is a payment you’re responsible for each month that typically doesn’t change much. This includes expenses such as rent or mortgage, phone bill, car payment, car insurance, student loans, and anything else you consistently pay about the same amount for each month. Separating your fixed expenses from those that vary each month will come in handy when it comes time to cut costs from your list.

This also means money for saving!

A lot of people leave saving until after all their expenses have been taken out of their budget. That usually means they have very little left over or that their budget just barely evens out and they have no incentive to cut expenses.

By taking money out for saving earlier in your budget, you’re forced to cut other expenses instead of foregoing saving for your financial future. It’s one of my favorite budget tricks and you’ll be amazed how well it works to make sure you save something each month.

Start by saving a fixed amount of 5% or 10% of your income, whichever you think you can manage.

3) Fill your budget out with variable expenses

Variable expenses are the part of your monthly budget that you have the most control over, though you’ll still need to look at all expenses if you need to make cuts. Examples of variable expenses in your budget include entertainment, travel, shopping, groceries, dining out, personal grooming and subscriptions.

You may need to prioritize these expenses to achieve a balanced budget each month. Placing similar items together into categories helps you realize exactly how much you’re spending in certain areas each month.

4) Set savings goals for your budget

Fidelity reports that the average American has just $104,000 saved for retirement. If you cling to the rule of withdrawing 4% of your retirement savings each year, that would mean a whopping $346 to spend each month beyond social security benefits.

That’s not much to live on unless you like Ramen noodles and Spam…like eating them every day in retirement.

Understanding how much you need in retirement starts with a personal investment plan that examines your retirement goals and how much they will cost. This will give you a better idea of how much you need to save each year.

Once you know how much you should be saving, you can work that into your budget. Start with a set fixed amount you know you can save and the work up to the additional saving you need to do by saving what’s left after expenses.

5) Budget tools to make it easier

Budgeting has never been easier thanks to a number of safe and secure online planners available to help you stay on track. Sign up for a free account on, BudgetTracker, or Manilla to stay on top of your finances.

For example, allows you to sync all your accounts so you can see all your financial activity in one place, create helpful alerts and see how much you’ve spent for the month to help you avoid going over budget.

Budgeting has gone mobile and there are some great apps you can use to help save. Keeping track of all your expenses each month can be intimidating but these apps make budgeting a breeze.

Bonus Budget Trick:

If you get paid bi-monthly and your bills don’t vary greatly in terms of what you owe, you can split your payments in half.

For example, you can pay half of the bills in the beginning of the month after you receive your first paycheck, followed by the second half, after you get paid at the end of the month.

This works especially well with fixed-payment loans that are paid monthly. Splitting your payment in half and paying every two weeks will save you thousands in interest and pay the loan off years earlier. By paying every two weeks, you are actually paying 13 full payments a year instead of 12 but you won’t even realize the difference.

Adjusting the timing of your credit card payment to when your cash flow is better may also allow you to pay more on your debt, which can help you more quickly lower your debt utilization ratio – an important factor in your credit score.  Reducing your debt can raise your credit score over time, helping you get better rates and save on new debt.

Budgeting can seem overwhelming at first, but once you get started you’ll see that it’s really quite easy. Making your first budget can be extra intimidating but these five steps are all you need to get started. Be sure to carefully monitor your spending habits to make sure you’re sticking to your budget and not living larger than you can manage.

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