How to Create a Budget from Start to Finish

Sarah Brumley

Sarah Brumley

If you’ve ever wondered how to set up a budget from start to finish, today’s your lucky day. I’m sharing exactly how I set up my budget each and every month, and I’m giving you a FREE worksheet to help you do just that. So, if that sounds like something you need, well then, let’s get started!

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How to Create a Budget from Start to Finish

Well hey there and welcome back to the Financial Fix Up Podcast. I’m your host, Sarah Brumley. This past week I had the opportunity to speak at a local moms group about budgeting and I was hoping to share that recording with you, but the audio was so bad that I didn’t want to put you through that. So, here’s my re-recording of that presentation so you can get all of the benefits!

And don’t forget to grab your free worksheet at lemonblessings.com/worksheet.

My Family Background

For those that don’t know me, welcome! I’m Sarah Brumley. My husband, Justin and I have been married for almost 19 years, I have two teenage daughters, ages 18 and almost 17, and a 3-year-old son – a little bit of a surprise with that one! Hehe.

Growing up my family didn’t manage finances well. When we had money, we spent money, and when we didn’t have money – we still spent money. And because of that, when I hit 18 and moved out of my parent’s home, I had to figure out my personal financial life the hard way. And then, I met and married my wonderful husband, and – turns out, he knew nothing about finance either. Compound that all with the fact that he was going through cancer treatment, we were both still finishing up college, and before we knew it we were up to our ears in medical debt, student loans, and because we often couldn’t make ends meet – we racked up credit card debt, too.

But…thanks to a simple strategy – and a lot of learning along the way – we dug our way out. And – since 2015, my goal has been to help other families do the same – both through my blog and through the Financial Fix Up Podcast.

Because, I NEVER want another family to struggle to find solutions for their financial situation. It doesn’t mean it’s going to be perfect, but you should never have to walk through it alone.

So, knowing that, I was asked to take some time today to talk specifically about how to create a budget and just some simple strategies you can put into play to help you live well on the income you already have.

Now, if you already have a well-oiled budget in place, that’s great! I know for myself that there are always ways I can adjust, so my hope is that you might find a new tidbit of info to help you, as well. And if you don’t manage the finances in your home – maybe this will be a good motivator to get you involved, because the more teamwork that goes into budgeting, the more likely it is to be successful.

Why Does Budgeting Matter?

So let’s start with the big question – why does budgeting even matter? Well, when you know how much money you have and where it’s going, that alone:

  • Reduces stress because you don’t have to guess or worry about whether you can cover your expenses
  • Helps you be more generous with those around you – because you know what you have and what you can offer in times of need
  • Helps you set and actually achieve family financial goals – whether those are debt payoff, saving for that dream vacation, or even buying a home.

…AND it helps you prepares for unexpected expenses that might arise and totally derail your progress – and we all know that life happens!

Common Budgeting Fears (And How to Overcome Them)

So, if that’s the case, and we know that budgeting can offer us all those great results, then why doesn’t everyone have a budget in place? Well, just the thought of budgeting can often bring up some very real fears:

Fear #1: “What if I realize I don’t have enough money?”

It’s scary to see the real numbers, but ignoring them won’t make the problem go away. Instead of avoiding it, use your budget as a tool to find solutions—like cutting unnecessary expenses, increasing income, or adjusting spending priorities.

Fear #2: “Budgeting feels too restrictive.”

Many people think a budget will take away their financial freedom. In reality, a budget gives you freedom by allowing you to spend with confidence. Instead of feeling guilty about a purchase, you’ll know it fits into your plan.

Fear #3: “I’ve tried budgeting before, and it didn’t work.”

Maybe you’ve struggled with budgeting in the past, but that doesn’t mean you can’t find a system that works for you now. Start small, make adjustments as needed, and give yourself grace to improve over time. And truly – so much grace. Because, we’re human, right?

Budgeting 101: Getting Started

Alrighty, so knowing all of that, let’s jump into getting that budget up and going in a way that works for you and your family. Because budgeting is not a one-size fits all plan. Your income, your expenses, your goals, are all going to look different than the person sitting next to you. And there’s nothing wrong with that, okay?

You’ll notice you have a worksheet on your table that you can use for this. And feel free to mark it up and make it your own, because if you want another copy that you can print and use over and again, you can just go to lemonblessings.com/momco and grab it there! Sound good?

Step 1: Determine Your Income

Figuring out how much money you bring in each month might seem straightforward, but it’s often more complex than it appears. For some, this is the easiest part of budgeting, while for others—especially those with fluctuating income—it can feel stressful. But no matter where you stand financially, knowing your true income is the foundation of a successful budget.

For the purpose of building a budget that actually helps you reach your financial goals, you need to compile a complete list of all forms of income. This includes:

  • Paychecks (after taxes and deductions)
  • Spousal or child support
  • Bonuses, commissions, or incentives
  • Side income or gig work (freelancing, babysitting, selling on Etsy, etc.)
  • Government benefits (Social Security, disability, food assistance, etc.)
  • Investment or rental income (if applicable)

Now you might be tempted to focus only on your income for the current month, but I encourage you to take a broader view. Even if you believe your income is steady, it’s important to check whether that’s actually true. Many people—especially those paid hourly or weekly—have months where their income fluctuates due to extra hours, missed work, or seasonal bonuses.

To get a full picture, I recommend that you:

Gather Pay Stubs and Statements – Look at the last 6-12 months of income records. If you have direct deposit, check your bank statements or pay stubs for actual amounts received after deductions.

Identify Patterns or Variability – If your paycheck is the same every two weeks, great! But if you work overtime, have seasonal work, or do side jobs, be sure to account for those variations. You may choose to live off whatever base income you have and then allocate the “extra” to things like debt payoff or savings or another goal you have, but you can’t do that until you know the reality of your situation.

Step 2: Identify Your Expenses

Once you’ve collected your income information, then it’s time to move onto expenses and quite honestly I think this is the most fun part about putting together a budget because the expenses are really where you see not only where that money is going, but where you might be able to make adjustments and actually find ways to make those goals happen.

But I do know that it can feel a little tedious to some, so I’m going to try to make this process simple. Okay?

I like to break expenses down into three categories – fixed or essential expenses, variable expenses, and grocery and household expenses. So, let’s look at how each of these categories work.

1. Fixed Expenses

These are expenses that stay the same every month.

  • Rent or mortgage payments
  • Utilities
  • Internet
  • Phone
  • Health Insurance
  • Life Insurance
  • Auto Insurance
  • Childcare Costs

I sometimes call these critical expenses because they are necessities—you cannot live without them. It’s important to identify what these are so you know the non-negotiable costs in your budget.

2. Variable Expenses

These are expenses that may change based on usage or personal choices and they are not necessarily “critical” expenses. So, you can likely live without them if you had to. Okay? Common examples include:

  • Hobbies and recreation
  • Subscriptions, like Netflix or Hulu
  • Cable or television
  • Gym memberships
  • Gas and transportation costs

…among others. When we get down to ensuring your goals, this is the area of your budget that you may choose to make cuts in, okay? But I’ll get into that more in just a moment.

3. Grocery and Household

The final expense category I have listed is grocery and household. And while this could be included in the variable expense category because it does change from month-to-month, it’s more of a critical expense in that you can’t cut it because your family needs to eat and everyone still wants to have toilet paper when they go, right?

And I have lots of resources to show how I set up my monthly grocery and household budget, but one of the big ways that we’ve managed to save money and stick with it at the same time is to plan weekly, instead of monthly. In our case, we get paid monthly, so I could definitely just budget $800 for food for the month, but the likelihood of getting to week four and still having money leftover isn’t good. Instead, we choose to break it down into four weeks and I’d allocate $200 to each week. I also like to create a separate line item for household expenses, like toilet paper and cleaning products, so we have enough to cover those when we need to.

✅ Action Step: Track Your Spending

To get a clear picture of where your money is going, I recommend reviewing at least the last three months of your bank statements. Ideally, you should go back 12 months since expenses fluctuate seasonally.

Ask yourself:

  • What expenses do I pay for every month?
  • Are there any charges I didn’t realize were still happening?
  • Are there subscriptions or services I can cancel right now?

Many people who complete this exercise come back shocked, saying,

“Sarah, I can’t believe we had four expenses totaling $200 that we didn’t even realize we were paying for!”

That’s why knowing where your money is going is so powerful. Even if you’re not ready to create a full budget, this simple activity alone can save you money and give you more control over your finances.

So, go take a look at your spending—you might be surprised at what you find! 😊

4. Debt Payoff

The debt payoff chart is pretty self-explanatory. You’ll write down each debt you have – every single one. Let’s be real here! And then you’ll add the starting balance – and I know that might not be fun to see, as well as the minimum payment you have to make each month to keep that account from going to collections. Once we allocate our funds, which we will talk about in a moment, you’ll add the actual amount you choose to pay. Sometimes that will be the minimum, but sometimes, depending on your goals, that’ll be more. So, we’ll look at that in a moment.

5. Savings Funds

The last category is your savings funds. And unlike fixed and variable expenses, savings funds are meant to prepare for those expenses that don’t happen every month, but they are still important to plan for. Some examples include:

  • Home maintenance
  • Medical expenses
  • School year expenses
  • Pet expenses
  • Holiday and birthday expenses
  • Car Licensing
  • Vacation
  • Generosity

…and whatever else you can come up with that applies to your own situation.

Since these expenses can catch you off guard, it’s crucial to know when they are due – if there’s a due date – and how much they will cost. A good rule of thumb is to look back on the last 12 months of expenses in those categories, add them up, and then divide by 12. That allows you to put a little money aside each month so that you don’t have to panic when that big expense comes up. So, for example, if your car registration fees are $120 per year, then you could divide that by 12 months and get $10 per month. $10 might not seem that much, but when you put it aside in that “fund” each month, then you’ll be ready to pay for your tabs when the time comes.

For things like pets or medical expenses, it might not be as cut and dry, but once again I recommend looking at how much you spend on cat food or litter each month and then adding a little extra to accommodate for vet bills and such. Or with medical expenses, you could have a certain amount you’d like to set aside to cover copays and co-insurance should something come up. It’s not an exact science, but it’s mean to help keep you from tapping into savings or putting those expenses on credit cards in the future.

Step 3: Give Each Dollar a Purpose

Once you know your income and your expenses, the next step is to bring the two together. The big question is: Can you cover all of your expenses with the income you currently have?

If the answer is yes, that’s great! But if you’re unsure or already seeing some gaps, this is where budgeting really becomes powerful.

Now, my favorite budgeting method is something called Zero-Based Budgeting. It’s actually really simple. The idea is that you assign every single dollar a job—whether it’s paying a bill, going into savings, paying off debt, or moving toward a financial goal. The goal is that by the time you’ve allocated all your money, your budget balances to zero.

Here’s how it works:

  • You start with your critical expenses—the ones you cannot live without.
  • Because you’ve already listed them out and know exactly how much they cost, this part should be easy.
  • You assign a portion of your income to each of those bills, subtracting the total as you go. I love the calculator on my phone for this activity
  • Then, you move on to your grocery and household expenses, your variable expenses, debt payoff and savings funds.
  • Ideally, by the time you finish, every dollar has been assigned, and your budget equals zero.

Reconciling Your Income and Expenses: What Happens Next?

Once you’ve assigned your income to cover all of your expenses, you might find yourself in one of two situations.

Either you’ve run out of money before you’ve covered everything, in which case it’s time to make some adjustments, or you actually have money left over after covering all of your expenses.

Let’s talk about both.

If Your Expenses Are Greater Than Your Income

If you’ve listed out all your expenses and realize you don’t have enough money to cover everything, don’t panic. This is where budgeting really helps you take control.

The first step is to look at your variable expenses—things like groceries, gas, eating out, entertainment, and shopping.

  • What can you reduce? Maybe you’re spending more than you realized in one area.
  • Are there any subscriptions or memberships you don’t use? Cancel them.
  • Can you find ways to cut costs on necessities? Meal planning, using coupons, or shopping sales can help stretch your grocery budget further.

If cutting variable expenses still isn’t enough, then it’s time to assess bigger changes:

  • Can you negotiate bills? Many companies will lower rates if you ask.
  • Are there opportunities to bring in extra income? A side gig, overtime, or selling unused items could help bridge the gap.
  • Do you need to adjust your lifestyle temporarily? Scaling back in some areas now can help you avoid financial stress later.

This might feel tough in the moment, but taking control now will set you up for less stress and more financial stability in the future.

If You Have Money Left Over

Now, if you’ve covered all your expenses and find that you have extra money left over, that’s amazing! But don’t make the mistake of letting it just disappear into random spending.

Instead, let’s give that money a job so it actually moves you forward financially. Here are a few smart ways to use it:

  • Start or grow your emergency fund. Even if you already have some savings, adding to it will help you be prepared for unexpected expenses.
  • Pay down debt faster. Making extra payments on high-interest debt can save you thousands in interest over time.
  • Add money to your savings funds. Whether it’s a family vacation, home repairs, or an upcoming large expense, putting money aside now will make it easier to afford later.

The key is to decide ahead of time where that extra money will go—before it disappears into small, unplanned expenses.

So, at the end of your budgeting process, ask yourself:

✅ If I need to cut back, where can I adjust without sacrificing necessities?

✅ If I have extra money, what’s the best way to use it to improve my financial future?

Because at the end of the day, budgeting isn’t just about cutting back—it’s about building up the life and financial security you actually want.

Time to Take That Next Step

Alright, we’ve covered a lot today—why budgeting matters, the common fears that hold people back, and the step-by-step process to create a budget that actually works for your family.

But here’s the thing: Information alone won’t change your finances—action will.

So before you leave today, I want you to take just 30 seconds and write down one financial action step you’re committing to this week. One small step. Maybe that means:

✅ Sitting down and writing out your income and expenses.

✅ Tracking your spending for the next 30 days.

✅ Canceling an unused subscription that’s been eating away at your budget.

✅ Setting a simple savings goal—even if it’s just $10 a week.

Whatever it is, write it down. Because small, intentional steps add up to big results over time.

And listen, I get it. This can feel overwhelming at first. I know firsthand how frustrating it is to feel like there’s never enough money, like you’re just treading water, hoping the next month will be better. I’ve been there—staring at bills, feeling like there’s no way out. But I also know this:

With small, intentional steps, change is possible. My family did it, and I know you can too.

So, if you’re ready to take control of your money and start using it in a way that truly serves your family, just start. Start messy, start small, but start today.

Because at the end of the day, budgeting isn’t about restriction—it’s about freedom. Your finances shouldn’t control you. You should control them.

And a year from now, you’ll wish you had started today. So start.

Whatever you decide, just know that I’m cheering you on! You’ve got this! Have an amazing day and I’ll chat with you again next time!

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