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How to Create a Budget Template

The YNAB Way

So, you’ve decided to sit down and figure out how to create a budget template, once and for all. Or maybe for the third or fourth or fifth time, but you’re serious about the “for all” part on this go around.

Good! Let’s get started.

How to Create a Budget Template

The hope offered by a new process, system, plan, or notebook can be slightly intoxicating—it feels like the universe might finally be handing you that one pesky piece you’ve been missing that would complete the puzzle of Responsible Adulthood.

Seriously—the only reason you’re not perfectly organized/physically fit/financially independent/able to find matching socks in the morning is because you didn’t have the right system! If only you had bought a new notebook, matching sticky notes, highlighters, colored pens, patterned washi tape, and fancy paperclips for that particular project, you’d be killing it by now.

Okay, at this point, I’m talking to myself about myself. We can stop buying the notebooks; they’re not the missing piece.

The point I’m trying to make is that the system is important, but implementing the actual habit into your day-to-day life is critical to long-term success, in both sock-matching and money management. So let’s talk about setting up a personal budget that will become a part of your normal life instead of another abandoned notebook.

Skip all of this good advice and jump straight to a Todoist checklist to create a budget template. Don’t you wish recipe bloggers would do this? (You’re more likely to succeed in a way that sticks if you forge ahead though.)

What You Need to Create a Budget Template

Before we get started, you’re going to need to make a list of the following things:

  • Monthly income (use your take home pay)
  • Monthly expenses
  • Non-monthly expenses
  • Savings goals
  • “Just for fun” expenses

Then add a category at the bottom for “Stuff I forgot to budget for” because let’s be realistic, there’s always stuff like that. Choose your budgeting tool of choice. It can be a budget app (ahem, YNAB), Excel spreadsheet or Google Sheets, or…a brand new notebook…whatever works best for you.

snapshot of budget categories

What is budgeting? Learn everything you need to know in our comprehensive guide.

How to Set Up a Budget Template

Once you’ve listed your different category groups and the categories that fall under each one, create two additional columns: label one column “Assigned” and the other “Available.” The rest of this process will be easier to set up and maintain on a budget spreadsheet, or even easier, in YNAB.

budget template snapshot

Step One: How Much Do You Need?

First, you need to come up with an estimate of how much each of those expenses will cost. Don’t get bogged down in this as you’re getting set up the first time—guessing is just fine. Your budget plan is going to evolve as you journey down the path of financial enlightenment. Hopefully.

Monthly expenses like rent, cell phone bill, electricity, student loan payments, health insurance, etc. are pretty easy to figure out. For non-monthly or variable expenses, like Christmas gifts, auto registration, car insurance, or annual subscriptions, divide your estimate by the number of months it takes for that cost to recur so that you can contribute manageable chunks on a monthly basis instead of choking on the whole cost when it comes up.

You’ll have a little more wiggle room when it comes to fun expenses and savings goals, but use those numbers to create a little accountability in your life—is your priority bottomless mimosas at brunch every Sunday or a three month emergency fund? There’s no wrong answer (regardless of what your dad would think). Your budget (and your spending habits) should be a reflection of what matters to you.

In YNAB, you can set up spending or savings targets to create an easy visual reminder of how much money you need to allocate, and by when (if applicable) to stay on track.

Now, before we get to step two, I want to call out that perhaps when you’ve previously thought of “budgeting” or “making a budget” that you’re done after step one. But you’re missing out on the best and most effective way of managing your personal finances if you stop there! Keep going because this is where it gets good.

Step Two: How Much Do You Have?

An illustration of a jar of money labeled Checking

Next, take a look at your bank balance. That’s how much money you have to distribute to each of these categories right now. It’s best to assign your dollars to categories based on due date and/or urgency.

Ask yourself how much money you have and what it needs to do before your next paycheck. Keep assigning money from your bank account to your categories until there’s none left. That’s the goal!

An image of the budget screen of the YNAB app on a phone showing that there are $1000 in the Ready to Assign section

(What you’ve just done? It’s called zero-based budgeting, and it’s about to change your life.)

Don’t make plans for dollars that you don’t have yet, like future paychecks…I know that seems hard but, trust me, it’s important. You don’t have to have the money for every category right now; focus on the money you have and what jobs it must do before more money arrives.

A screeshot of the Ready to Assign section of the budget showing $0 and All Money Assigned

Now look at your spending categories. The amount listed in your “Available” category is how much you have to spend on those items. When you make a purchase, the amount spent gets subtracted from your available total. If you accidentally go over that amount, you didn’t fail at budgeting. It’s no big deal. Just cover overspending by moving money from another category.

Step Three: Profit

Keep doing the steps listed above until you become more aware of your spending and how it affects your life. At that point, you’ll make more intentional choices and you’ll eventually be able to pay next month’s bills with this month’s money.

Sound complicated?

Let’s Summarize and Simplify

The Four Rules of YNAB

illustrations that represent the Four Rules of YNAB: hard hat, light bulb, boxing glove, calendar

Rule One: Give Every Dollar a Job

Decide how you’re going to spend every dollar you have by assigning each and every dollar to a category. Why? Because it will bring you peace of mind to be able to see where your money is going and what it needs to do. It will also help you focus and commit to what’s important to you.

Rule Two: Embrace Your True Expenses

Unexpected expenses aren’t really unexpected, are they? You know your car will need new tires, the holidays come every single year, and you’re probably not going to cancel that Amazon Prime subscription. Dividing those irregular expenses into monthly amounts so they can accumulate by the time the total cost is due lets you hit the brakes on that financial rollercoaster.

Rule Three: Roll With the Punches

Okay, you didn’t join a money monastery. Don’t turn budgeting into deprivation or a self-imposed source of shame or you’ll quit doing it. If you overspend from one category, just cover it by moving money from another category. Each category is like an envelope full of cash—you can borrow from one if there was an oversight or indulgence. You will need to cover the overspending though, because when your Dining Out “envelope” is empty,  you really don’t have the money to dine out. You’ll learn from experience.

Roll Four: Age Your Money

With thoughtful, intentional spending, saving, and expense tracking, you’ll have more breathing room in your monthly budget. That’s when the magic happens! Start working towards your long term financial goals, save money more easily, and fund your future.

Want to spend some time exploring and organizing your finances, future and feelings? Our free Change Your Money Mindset Workbook and email series will inspire you to change your relationship with money.

Or, you know what? We could do the “create a budget template” part for you. We actually already did. Just sign up for a free 34-day trial of YNAB, an award-winning app and innovative method for money management. There’s no credit card or obligation required—give it a try.

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How to Create a Budget Template