Managing your money for the first time? You’re not alone.
Most of us didn’t learn about budgeting in school. So when the bills start piling up and the paychecks barely cover the basics, it’s easy to feel overwhelmed. But the truth is—you don’t need to be rich or perfect to create a monthly budget. You just need a starting point and a plan that works for you.
In this complete beginner’s guide, we’ll walk you through how to create a monthly budget for beginners, break down the steps with real-life examples, and offer tools to help you stay on track. Whether you’re working full-time, juggling multiple side gigs, or figuring out how to stretch your student loan refund, this article is for you.
What Is a Budget—and Why Should You Care?
A budget is simply a plan for your money. It helps you decide:
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How much money is coming in
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Where it needs to go
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What’s left over for saving or spending
If you're living in the U.S. and in the 18–35 age range, chances are you're facing rising rent, student loans, credit card debt, and the ever-increasing cost of food and transportation. That’s why budgeting matters—it gives you control, clarity, and confidence.
Still skeptical? Here’s what budgeting isn’t:
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It’s not just for rich people
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It’s not about cutting all the fun out of your life
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It’s not a one-time setup and forget situation
Instead, think of budgeting as a tool to help you live better with the money you already have.
Step 1: Know Exactly How Much You Make
Start by figuring out your monthly net income—this is your “take-home” pay after taxes and deductions.
Your income might come from:
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A full-time job
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Part-time work or internships
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Freelance gigs or side hustles (DoorDash, Uber, etc.)
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Unemployment benefits or government aid
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Child support or other family assistance
If your income isn’t consistent, don’t panic. Add up your total income from the past 3–6 months, then divide by the number of months to get a realistic average.
💡 Tip: Don’t forget to include tips, bonuses, or cash payments—those dollars count too!
Step 2: Understand Your Spending Habits
This part might be uncomfortable—but it’s necessary. To build a working budget, you need to know where your money is going.
Track every expense for 30 days
Use your bank statements, budgeting apps, or even a notebook to log:
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Rent and utilities
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Groceries and household supplies
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Gas, rideshare, or transit passes
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Subscriptions (Netflix, Spotify, gym, etc.)
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Eating out, coffee runs, or delivery
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Credit card and loan payments
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Unexpected or “oops” purchases
You might be shocked by how much you’re spending on takeout or that extra Target run.
If you’re more visual, check out our Monthly Budget Excel Guide to organize your spending into clear categories.
Step 3: List Out Your Financial Priorities
Before jumping into numbers, take a second to ask yourself:
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What matters to me financially?
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What do I want to accomplish this year?
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What are my non-negotiables?
Example goals:
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Build a $500 emergency fund
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Pay off $2,000 in credit card debt
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Save for a car or a move
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Stop overdrafting my bank account
These priorities will shape how you allocate your money. For help creating realistic financial goals, read How to Set Financial Goals That Actually Work.
Step 4: Pick a Budgeting Method That Matches Your Style
There’s no perfect method—just the one that works best for you. Here are some of the easiest methods for beginners:
✅ The 50/30/20 Budget
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50% Needs: Rent, utilities, groceries, transportation
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30% Wants: Streaming services, eating out, shopping
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20% Savings & Debt: Emergency fund, credit card payments, student loans
Great for people with consistent income who want a balanced approach.
✅ The Zero-Based Budget
Every dollar is assigned a job—until your income minus expenses equals zero.
This method forces you to be intentional about every expense and works well if you like detailed planning.
Ideal for people who want to know exactly where every dollar is going.
✅ The Pay-Yourself-First Method
Automatically move a percentage of your income to savings as soon as you get paid. Then budget with what’s left.
Good for people who tend to spend whatever is in their account.
Not sure which method fits your lifestyle? We’ve broken them down further in our Budget Planning for Beginners.
Step 5: Build Your Monthly Budget
Now it’s time to put everything together.
Start with your income:
Let’s say you bring in $2,500/month after taxes.
Then list fixed and variable expenses:
| Category | Budgeted Amount |
|---|---|
| Rent | $1,000 |
| Utilities | $150 |
| Groceries | $300 |
| Transportation | $200 |
| Subscriptions | $50 |
| Eating Out | $100 |
| Debt Payments | $300 |
| Savings | $200 |
| Emergency Fund | $100 |
| Misc/Fun | $100 |
| Total | $2,500 |
This is just a sample. Your budget will look different depending on where you live, your goals, and your lifestyle. The key is to balance your expenses with your income and make adjustments as needed.
Step 6: Use Tools to Stay on Track
You don’t have to do it all manually. Here are some tools that make budgeting easier:
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Spreadsheets: Use our Monthly Budget Excel Guide for a free starter template.
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Apps: Try YNAB, Mint, Goodbudget, or EveryDollar.
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Bank features: Some online banks offer built-in spending categories and alerts.
💡 Bonus Tip: Set up automatic transfers to your savings so you don’t even have to think about it.
Step 7: Review and Adjust Monthly
Life changes—your budget should too.
At the end of each month:
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Look at what you actually spent
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Compare it to what you planned
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Adjust your categories for next month
If you overspent, don’t beat yourself up. Use it as a learning moment. Maybe you underestimated groceries, or forgot about a birthday gift. Budgeting is flexible—it should evolve with you.
Common Mistakes Beginners Make (and How to Avoid Them)
Here are a few traps to watch out for:
❌ Not budgeting for fun
Cutting out all fun makes your budget unsustainable. Add a “fun money” line.
❌ Forgetting irregular expenses
Quarterly insurance, car repairs, gifts—these come up, so build a buffer.
❌ Comparing your budget to others
Your financial situation is unique. Focus on your goals, not Instagram.
❌ Giving up after one bad month
One bad month doesn’t mean budgeting doesn’t work. It means you're human.
Final Thoughts: Budgeting Is Self-Care
Creating a monthly budget isn’t just about dollars and cents—it’s about peace of mind. It helps you stress less, save more, and spend intentionally.
So if you’re just getting started, be kind to yourself. Your first budget doesn’t have to be perfect. What matters most is that you begin.
Share This and Help Others Take Control
If this guide helped you understand how to create a monthly budget for beginners, pass it on!
📢 Share this article with your friends, roommates, or anyone who wants to get better with money. Starting the budgeting journey is way easier when you’re not doing it alone.