Welcome to the third and last post of our budget series. In post one, we defined a budget and reasons its imperative. In post two, we rated common budget strategies. And now, making a budget! We will take you through six simple steps to make a beginner’s budget that will complete step II on our build your kingdom roadmap.

As this is an early stop, we will assume that the saving goal for your budget will be towards an emergency fund. We believe in starting simple and adding complexity as you get further down the road. A future post will help you decide on the amount that is right for you, in this post we will use three months of your expenses as the goal.

Download the Duke Of Dollars Budget Implementation excel workbook to easily follow along with the simple steps as we make your budget!

  • If you do not have Microsoft Office – please download Open Office
  • This template will be used to calculate your monthly cash flow, then transferred to your actual budget strategy in step 5.
  • The workbook has two sheets, Blank and Example. An example of fake numbers shows how to fill out the sheet. Blank is for you!

This post is part three of three in the Budgeting Series:

  1. What is a Budget?
  2. Choosing a Budget Strategy for your world
  3. 6 Simple Steps to Make Your

Step 1. Making a Budget -> Estimate Income

How much money will you have flowing into your accounts each month? List all consistent income channels you have each month!

There are two ways to drastically change your budget. The first is to increase your income the second, more powerful approach is to cut expenses. Both need to be continuously iterated to improve each month.

Potential income lines:

  1. Full-time job
  2. Side incomes
    1. Freelancing
    2. Blogging
    3. Etsy shop
  3. Real estate income
  4. Dividends

Fill out the following table starting in cell B17 on the worksheet:

A screenshot of an excel workbook with income item listed in the first column, and amount listed in the second.

Step 2. Making a Budget -> List Expenses

For this workbook, we will use three categories of expenses to help break it down into smaller steps.

Fixed expenses

  • Expense items that do not change month to month
  • Examples:
    • Rent or mortgage
    • Car payment
    • Student Loan Payment

Flexible expenses

  • Expense items that are variable each month and can be trimmed down as life lets you
  • Examples:
    • Water bill
    • Electric bill
    • Groceries

Discretionary expenses

  • Expenses that are considered wants and also part of living life
  • Examples:
    • Movie nights at the theater
    • Wine tasting
    • Going to a concert

Fill out the following tables starting in cell E17 on the worksheet:

A screenshot of an excel workbook with expense tables that have item listed in the first column, and amount listed in the second.

Step 3. Making a Budget -> Determine Your Cash Flow

The example sheet automatically calculates your monthly cash flow by summing income, then subtracting summed expenses.

Here is where a few questions come into play:

  1. Do you have a positive cash flow?
    1. If negative, then take a very hard look at each expense item and determine what can be cut
      1. Can you stop spending money at Starbucks and make coffee at home instead? Can you head to the library for your books instead of buying them on Amazon?
      2. There are expenses for rent, that you may not be able to cut. In the future, you can look to reduce by moving to a cheaper place or getting a roommate
    2. If positive, you are on your way to meeting your savings goal!

Our recommendation for leaving wiggle room in your budget helps cover unexpected expenses, allowing you to still save automatically and knowing you will be covered. At the beginning, this may be a challenge. Keep your head up, put your crown or tiara on, and start making the king or queen decisions necessary to change it!

To see your cash flow – check out cell E8.

A screenshot with a cash value that shows the sum of income minus sum of expenses.


Step 4. Making a Budget -> Create Savings Goal

In our worksheet, you are seeing the positive cash flow in your bank account each month. Create a savings goal for your emergency fund and leave room for unexpected budget charges.

Our top 2 recommended options here:

  1. Dave Ramsey’s Baby Step:
    • If you are struggling to get any savings, your goal is to get a $1,000 emergency fund ASAP
    • If your situation has reached this level, cancel cable today and save the average $100 every month for 10 months!
      • Do anything necessary to start saving any small amount as you begin to build the foundation required for your future!! Keep the comeback mindset!
  2. Monthly Expenses * 3
    • The spreadsheet calculates this for you based on your expenses. If you’rer unable to keep a cushion and meet the calculated amount, reduce it. Starting small and building into bigger amounts is what makes financial stability such a long-term goal.

Do you feel like you’re unable to make ends meet? Truly analyze your spending. Where do you fit on http://www.globalrichlist.com/?

5. Making a Budget -> Decide Your Strategy

If you have reached step 4, congratulations!!! You have the basic information required for budget implementation with any strategy from Choose a Budget Strategy for Your World. Below are example workbooks for each that will help you create the budget that works for you.

  • Subtraction – This is what you have already implemented in steps 1-3. Linked the workbook again for your convenience
  • Cash Budgeting – Use the worksheet from steps 1-3, then categorize (we recommend high-level categories to ease implementation), buy cheap envelopes, buy markers, and stay true!
  • Proportion/Percentage Worksheet – This one references a great google sheets template created by Samantha Anderson. If you would like this in Excel please let us know in the comments
  • Cashflow Budget Example with Allocations – One account, simple and effective for planning ahead

6. Budgeting Tools (optional):

We will be creating a separate post on how to best utilize the top budgeting tools. Here are a few links to get you started if interested:

  1. Mint
  2. You Need a Budget
  3. Personal Capital

Step II Completed!!

Great job. We appreciate you taking the time to create a budget following our guide. Why? Because we believe tracking your spending sets you up for the success you want in your life. If you’re successful, we are successful in our goal to enrich others lives!