Budgeting Basics: How to Plan a Monthly Budget

2 min read

Purpose: Provide a clear process for beginners to build a monthly budget that aligns with cash flow and real obligations.

1. Gather accurate income and timing

  • Record the exact net amounts and dates of your next 2–3 paychecks.
  • Include irregular income (bonuses, freelance invoices) and note the expected receipt date.

2. List fixed and variable expenses with due dates

  • Fixed: rent, insurance, loans, subscriptions (include due dates).
  • Variable: groceries, utilities, transportation (estimate monthly range from past statements).

3. Separate essentials from discretionary spending

  • Essentials: food, utilities, medication, minimum debt payments.
  • Discretionary: dining out, entertainment, non-essential shopping.

4. Build a weekly cash projection

  • Convert monthly obligations into a week-by-week schedule: starting balance + inflows − scheduled payments = weekly projected balance.
  • Identify weeks with potential shortfalls and where buffer cash is required.

5. Set realistic savings and buffer goals

  • Prioritize an emergency buffer (see: Building an Emergency Fund).
  • Allocate remaining surplus to savings goals and discretionary spending.

6. Review monthly and adjust

  • At month end, compare projected vs actual. If essentials consistently exceed estimates, increase essential estimates or adjust spending.

Quick checklist ✅

  • Record paycheck dates and amounts.
  • List fixed bills with due dates.
  • Estimate variable costs using recent statements.
  • Produce a weekly cash projection.
  • Set a buffer and automate transfers where possible.

See also