Creating a budget may seem like a simple thing to do. But the truth is that most of us have no idea where to start or we can’t seem to successfully follow the money plans that we put in place. Going through the motions of setting up a budget is not enough, to experience the benefits that come with budgeting, we have to actually adhere to it.

Financial planning is essential to learning how to live within your means and is a key factor in helping you achieve financial success. I often tell my children that learning how to master your money is the most empowering education you will ever have.


Here’s why: When you learn how to make money work for you (at any income level) it empowers you to never be enslaved to your wage – because you will be living below your means, paying down debt, creating an emergency fund and padding your savings.

So how does a busy modern woman, like you, learn to manage your money?

While grasping the principles of budgeting is easy, actually putting the concepts to work can be a bit more difficult. That’s why I’m sharing a few simple steps that will have you mastering your cash flow in no time!

  1. Calculate your Monthly Net Income (gross income – taxes)

  • If you’re paid by an employer this is already done for you. Review your paystub.
  • If you are a business owner or self employed, calculate your average income per month minus your self-employment taxes.
  • Include any income earned from your side hustle or alternative methods.

{Think: eBay sales, paid online surveys…etc}

  1. Add up your Fixed Expenses

**Do not include any variable expenses (eating out, shopping, discretionary spending etc.)**

  • Fixed Expenses should total on average 50-60% of net income.
  • Examples: mortgage/rent, car payment, utilities, daycare, student loans, credit card payment minimums…etc

For utilities, although the monthly amount may vary, use an average for the purposes for creating a budget

  1. Calculate your monthly Savings Goals

  • In order to start saving consistently, you need to start thinking of saving as a fixed expense. The more you see saving as a monthly expense, like rent or your car payment, the more likely you are to develop a habit of putting money away.
  • Initially your savings goal should total, on average, 5 -15% of your net income. If you’re just getting started, I suggest starting with 5% – If you earn $1,000 you will save $50. Seems doable right?

Yes, this amount is separate, or in addition to any automatic deductions you contribute to a 401k account through your employer.

Not all savings goals are the same, and you can have several goals that you are simultaneously working towards.

Examples of savings goals are:

  • building an emergency fund
  • eliminating debt
  • travel fund
  • saving for a home purchase down payment
  • new electronics, appliances or furnishings
  • holiday savings

    1. Calculate Variable Expenses

    • Variable expenses are comprised of those costs that are within our control. For example, you can lower grocery costs by using coupons, shopping weekly sales and staying within a predetermined amount.
    • Variable Expenses should account for 20-30% of net income.
    • Examples include: groceries, gas, clothes, cable, additional amount paid towards credit card/loan debt etc.

    1. Calculate leisure and self-care activities

    • This category is important to living a well-rounded life; and to ensure that you’re having a little fun as you get your finances in order.
    • Leisure Expenses account for 5-8% of net income.

    Examples: Starbucks runs, beauty routines (manicure, salon visits…), dining out, entertainment, etc.

    1. Deduct Expenses from Net Income

    Here’s a what the equation should look like:

    Net Income

    –   Fixed Expenses
    –   Savings
    –   Variable Expenses
    –   Leisure Expenses

    = Surplus/ Breakeven/ Deficit

    You will have one of the following outcomes:


    Monthly Surplus

    — Congratulations, You are on the right track!!

    After accounting for all of your expenses and contributing to your savings… you have additional money that you can use to save more, start investing with, or even make a purchase that you may have been putting off!



    — Nice work!

    You actually want to break even every month. You’ve put ALL of your money to work for you! Think about it, you’ve allocated for every type of expense – including saving and you’re on the right track.



    — Let’s be honest, it’s time to make some changes.

    The automatic thought is to figure out how to make more money, and while I’m all about multiple streams of income – and this should be the ultimate outcome; but it’s more realistic, at this moment, to take a look at your expenses and start cutting back!

    That may mean less expensive housing, or calling the cable company to get your bill lowered, finding out about budget billing plans with your utility companies, making your kids lunch from home or even getting some disposable to-go cups and making your morning coffee before you head off to work.

    No matter the results, you now have a full and thorough look at how you earn your money and how it’s distributed each month. So whether your budget shows a surplus, that you’re just breaking even, or are currently experiencing a personal deficit, you can take control of your finances now, by simply taking the time to implement a budget and by creating financial goals for yourself.

    My weekly posts are designed to help you: change how you feel about money, increase the ways you earn it, open your eyes to non-traditional streams of income, explore new ways to save, build wealth and improve your credit score!

    You won’t want to miss ANY of these money tips, so subscribe!!!

    Don’t miss next week’s post as we navigate the creative ways to stash more cash!

    Have a specific financial question? Want information on a particular topic or have a tip that you would like to share… leave it in the comment section, let’s have a conversation.