How to set a budget (and maintain it!)

I recently got this question from Robin, a reader friend:

Q: How do you set a budget? I have never, ever done that and don't understand how to get started. I would really like to get on one.

Hello Robin!
Here are my tips on how to set a budget. We didn't have much of a budget when we were first married. But we certainly had to tighten up a bit when we had our first child (having kids changes EVERYTHING). I'm sure everyone has a different process for setting a budget, but here's what we did…and continue to do every time our situation changes (we move, have another child, etc.):
  • We make a spreadsheet in Google Docs. We do it there so it's online and we can access it from anywhere, including our cell phones. It's nice having it online because if your computer crashes, you won't lose your hard work.
    • We then work down the column and below our total, make a list of all our SET bills first (mortgage, insurance, car payment, etc.; things that don't really change month to month). Get out your credit card and bank statements to make sure you don't miss anything. We tried to stay pretty accurate, but also rounded up to the nearest dollar.
    • After bills, we did average regular expenses(groceries, gas, utilities, spending money, gifts for people, etc.; basically everything else you regularly spend money on that is variable from month to month). If there is something regular that you do but it's only every few months (like getting your hair cut/colored, for example), put it down in full – don't break it up monthly. It's hard to plan ahead for those expenses and you pay for them in full, so you need to budget for them in full! If you DON'T pay for them in full (if it's a monthly payment, for example) then it should go in the “bills” category because it's a regular, consistent monthly expense.



(Function button)
Hit SUM and then highlight the boxes of all your expenses…
…and subtract it from your take-home income.



Guess what?
Scary, huh?

The good news? Discipline is a beautiful thing!

So now that you have a budget, what's next?

Go to our “beginner's guide” page and it will walk you through every next step!


  • Once you know what you spend and how much you have left over (if any), now you can crack down and start tightening your belt. Get rid of things you don't need (cable, getting your nails done, a cleaning lady, eating out, etc.) You will be shocked at how much you can save if you just sacrifice a little.
  • Got money left over at the end of the month? Good for you! That's tough to do! Now make a plan for that money so it goes to the best possible use. Stick it in a separate savings account or fund and make a definite plan for what it's going for. Remember, you should have 6 months worth of income stored in savings for a rainy day. Don't touch it until you've got that reserve. After that, have fun!
  • Just remember that the sacrifices you make don't have to be forever. Just get a hold on your finances, build up a savings, and slowly start implementing the “fun” stuff again!
  • Get your family on board. Trust me, if you try to budget but your spouse doesn't, it WILL NOT WORK. It must be a mutual agreement. It's a tough road, you need everyone to be on-board.

Click HERE for more ideas. It's our huge post about how we were in over our heads BIG TIME financially and through discipline not only got out of debt, but have now moved into our 7 bedroom dream home.



Another great way to set and maintain budgets is through, a free money-managing site. It keeps track of all your credit cards, bank accounts, bills, etc…it's pretty amazing. However, I still use a spreadsheet for budgeting because Mint lacks the ability to do a few things that I needed. Also, if you spend money in cash it doesn't track it so you have to remember to enter it manually (same with using a spreadsheet!). Again, be sure to check out the Beginner's Guide page that helps you with all of this, step by step!

What methods do YOU like to use?

Good luck!

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  1. AvatarVirginie Sabag says


  2. AvatarBarb S says

    I’m confused about your list of bills. Why do you not have a phone expense? Cable? Although that is easier to live without. Rental/Home insurance? Although that may be put into your mortgage. Water? Garbage? I’m struggling with your budget. Please help explain how you pay for school supplies and birthday/holiday presents. Any information will help.

    Thank you,


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