For some people, budgeting comes easy. But for most, budgeting (and money management) is a skill that must be learned. If you’ve never had to write a budget before but want to, here’s how to do it, step by step.

Note: This is the first of five posts. Next week we’ll go over Part 2: Income.

I’m a financial coach, and it brings me so much joy helping people be the heroes of their own financial story. Budgeting is a large part of what I help do. If you have additional financial concerns, such as developing a plan to get and stay out of debt, developing short- or long-term goals, or would like a one-on-one consultation, feel free to send me an email at alicia@simplejoyfuljourney.com or click here to pick a date and time.

So without further ado, let’s work together to develop your own budget.

First things first, involve your spouse!

If you’re married, it’s vitally important that you involve your spouse. Sticking to a budget will never work if you aren’t in agreement with each other. Even in households where one person manages all of the finances it’s important for both adults to understand where the money is coming and going.

Don’t have a spouse? Feel free to involve a trusted friend or family member to help you create and stick to your budget!

Below is an outline of what we’ll be doing throughout this series. Today’s post will focus on Expenses.

Steps to Creating a Budget

1. Write down your expenses.
2. Write down your income.
3. Balance your checking and savings accounts, including cash on hand.
4. Determine your spending categories.
5. Create a spending and savings plan (aka, a Budget!).

That looks simple, right? We’ll go through each step in detail and create your budget together. Grab a couple sheets of paper and a pencil (or a pen if you prefer) and let’s go!

Step 1, write down your expenses.

It’s important to know where your money is going before you can adjust your spending to meet your income. Let’s start with fixed expenses.

1. Begin by gathering all of your bills. These might include your utility bill, phone bill, credit card bill, or any payment due notice you get in the mail. Write each of these down on your paper in its own row. It should look something like the picture below. Don’t worry about amounts yet, we just need to establish where your money is going, not how much of it is going out.
2. Next, find your latest checking account statement, or pull up your bank account online or in your bank’s app. As you look through your spending here, take note of any loan payments or recurring payments that are automatically taken out of your account by your bank or other company. Write these down on your paper under the bills listed above.
3. If you have credit cards, open each of the latest statements or pull them up online or in the app and do the same here as you did with your bank accounts. Look for subscriptions and automatic payments, and add those to your sheet of paper.
4. One last thing: You may have expenses that are paid on a 6-month or yearly basis, such as association fees, taxes, professional services, and insurance, among others. Think back over the past year and determine those things you’ve paid for that you expect to pay for next year as well. If you need to, go through your bank and credit card statements for the past 12 months. Write those down on your paper under your credit cards (if you have them).

Good, now you know the expenses that don’t vary in amount from month to month. Go back through that list and add the amounts to each bill. If you have a bill that varies, such as a utility bill, average the last three months to have a starting point.