How to Create a Monthly Budget in 5 Simple Steps [Beginner’s Guide]

Introduction: Why Budgeting Feels Like a Diet (But Actually Isn’t)

Let’s be honest — the word budget feels restrictive, right? Like being on a money diet where you can’t have your favorite “dessert” (read: impulse shopping on Amazon). But here’s the twist: a budget isn’t about saying “no” all the time. It’s about saying yes to what actually matters.

When I created my first monthly budget years ago, I thought I’d be stuck eating Maggi for a month. Instead, I found out I was just spending ₹3,000 a month on coffee and snacks without realizing it. That moment? Eye-opening.

So, if you’re a beginner and thinking, “Where do I even start?” — you’re in the right place. In this guide, I’ll walk you through 5 ridiculously simple steps to create a monthly budget that won’t make you feel broke but will help you gain control of your money.

Step 1: Track Your Income (Know What’s Coming In)

Before you start juggling numbers, you need to know your baseline. How much money actually hits your account every month?

Think of it like cooking: you can’t plan a meal without knowing what ingredients you’ve got.

• If you’re salaried, this is easy → your net take-home pay.
• If you freelance or run a business, list your average monthly earnings.
• Don’t forget passive income (interest, rent, dividends).

👉 Pro tip: Use a notebook, an Excel sheet, or apps like Walnut, Money Manager, or ET Money (if you’re in India) to jot this down.

When I did this the first time, I realized my “side hustle” (freelancing gigs) added an extra 20% to my income — but since I wasn’t tracking it, it always disappeared.

Step 2: Track Your Expenses (Where the Heck is Your Money Going?)

This is where most people face a shock. You’ll probably realize you’re spending way more on “small things” than you thought.

Here’s a trick: track your expenses for 30 days. Write down every single chai, every auto ride, every Netflix subscription. Trust me, you’ll be shocked.

• Fixed Expenses: Rent, EMIs, insurance, school fees.
• Variable Expenses: Groceries, dining out, petrol, shopping.
• Fun / Lifestyle: Entertainment, trips, subscriptions.

📌 Example: Last month I realized my “small daily ₹200 cappuccino” habit cost me ₹6,000. That’s literally a weekend getaway sacrificed to caffeine.

👉 Use apps like Walnut, PayTM Money, or even a simple Google Sheet. Awareness is the first step to control.

Step 3: Set Your Goals (The “Why” Behind Your Budget)

Here’s the thing: without a goal, budgeting feels like punishment. But if you tie it to something you want, suddenly it feels worth it.

Ask yourself:

• Do you want to build an emergency fund?
• Save for a trip to Goa or Europe?
• Start investing in mutual funds or stocks?
• Pay off debt?

For me, my first budgeting goal was simple: build a ₹50,000 emergency fund. Every time I skipped a delivery order and cooked at home, I’d remind myself, “This ₹500 is going to future me.”

👉 Write your goals down. Stick them on your wall or phone wallpaper if you have to.

Step 4: Choose a Budgeting Method That Fits You

Here’s where it gets fun. There’s no “one-size-fits-all” budget. Pick a method that matches your personality and lifestyle.

Popular Budgeting Methods:

     1. 50/30/20 Rule

• 50% Needs (rent, groceries, EMIs)
• 30% Wants (movies, eating out, shopping)
• 20% Savings/Investments

      2. Zero-Based Budgeting

• Every rupee has a job. Income – Expenses = 0.
• Good if you overspend easily.

      3. Envelope System (Digital in India)

• Divide money into categories like rent, food, travel, etc.
• Apps like YNAB (International) or ET Money (India) mimic this.

👉 Personally, I use a mix of 50/30/20 + Zero-Based. Why? Because the 20% savings part keeps me disciplined, but I also like assigning everey rupee so it doesn't "mysteriously vanish".

Step 5: Review & Adjust Every Month

Here’s the secret: your first budget will suck. And that’s okay.

The ey is to review at the end of the month:

• Did you overspend on food?
• Did you save less than you planned?
• Did an emergency expense pop up?

Budgeting isn’t about perfection. It’s about progress. Over time, you’ll adjust and find your sweet spot.

Think of it like going to the gym — you don’t get six-pack abs in a week. You keep showing up, and slowly, it bcomes a habit.

FAQs: Quick Answers for Beginners

❓ What’s the easiest way to start budgeting?

Start with the 50/30/20 rule. It’s beginner-friendly and helps you balance needs, wants, and savings.

❓ Do I need apps for budgeting?

Not really. A simple notebook or Google Sheet works fine. But apps like Walnut, ET Money, or Money Manager make it easier.

❓ How much should I save monthly?

Experts suggest at least 20% of your income. But even 5–10% is a good start if you’re tight on money.

❓ What if I have irregular income?

Use your average monthly income (look at 3–6 months). Budget based on the lower side to stay safe.

Final Thoughts: Your Budget, Your Freedom

A budget isn’t a prison. It’s more like Google Maps for your money — it tells you where you are and how to get where you want to go. Without it, you’re just wandering and hoping you’ll reach.

I’ll be honest — the first month feels weird. You’ll slip, you’ll cheat, you’ll feel like giving up. But stick with it. By month three, you’ll notice you’re saving more, stressing less, and actually enjoying the process.

Remember, it’s not about being rich. It’s about being in control.

Your Turn!

Have you ever tried creating a budget before? If yes, what was the hardest part? If not, what’s stopping you? Drop your thoughts in the comments — I’d love to hear your stories.

And hey, if you found this guide helpful, share it with a friend who’s always “broke by the 20th.” You might just save their wallet (and friendship).