How to Create a Budget Template

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.

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.

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?

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!

(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.

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

How you spend your money is so personal. YNAB has never been about telling people what to spend their money on. However, over the years, we've found that if you focus on these five key aspects of spending—Reality, Stability, Creation, Resilience, and Flexibility—you'll thrive. You'll break the paycheck-to-paycheck cycle, feel good about your present, excited about your future, and stay flexible to better respond to setbacks and opportunities.

Reality: What does this money need to do before I’m paid again? 

Reality is the first step. You can’t plan a journey without knowing where you are. Getting clear about how much money you have and what that money needs to do next helps you avoid spending more important money on less important things. 

Stability: What larger, less frequent spending do I need to prepare for?

Stability reduces stress and uncertainty. Anticipate upcoming expenses and start setting small, manageable amounts of money aside to save yourself from the emotional drama of one big bill. After all, the holidays happen every year and your car will need new tires someday—Future You will appreciate that you planned ahead!

Resilience: What can I set aside for next month’s spending?

Resilience is being proactive instead of reactive. When next month’s expenses are covered, payday and due dates don’t really matter and financial emergencies become minor inconveniences. This built-in breathing room helps you rest a little easier and frees up mental space for something more fun, like cheating at Monopoly. 

Creation: What goals, large or small, do I want to prioritize?

Creation is giving your goals a chance (with money). Ask yourself the age-old question of, “What do I want to be when I grow up?” over and over again and then give your dollars jobs that will make that possible. Who do you want to be and how can the money you have help you get there? 

Flexibility: What changes do I need to make, if any?

Flexibility means changing your plan when new priorities arise. There’s no such thing as a normal month and the answer to “Who do I want to be?” can change from at-home chef to DoorDash frequent-flyer on the drive home. And that’s okay! It’s your money and your plan for it can change at any time—without guilt, stress, or second-guessing. Change your mind, move some money, and move on. 

Each of these questions has a different focus; you’ll move fluidly between them throughout your life as circumstances change, but spendfulness is available to you the moment you begin. You don’t set it as a distant goal and then arrive there later. You live it, in every moment, right now and always. 

And it feels amazing.

‍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.