How to Create a Personal Monthly Budget

Home  /  Blog  /  How to Create a Personal Monthly Budget

How to Create a Personal Monthly Budget

By: Terry Burgess, Midlife Coach for Men


I don’t know about you but if you asked me back when I was 25 years old “Do you have a personal monthly budget?” I would have laughed.  My response then would be if I have paid my bills and I have money left over then I met my budget.  Fast forward 23 years to today and I will tell a much different answer.

Now that you have a Personal Emergency Fund account lets learn how to create a monthly budget that is going to help you keep you on track financially. Before we continue I must give you this warning. Do not try to go about handling your finances without having a monthly budget and a Personal Emergency Fund.  If you do not use these two resources you will find yourself more likely to be in Bankruptcy and not in a positive balance in your personal bank accounts.

Should you not know what a Personal Emergency Fund account is visit the following link to my blog on what a Personal Emergency Fund is and why you should have one (http://

So where do you start with creating your budget. Here is a seven step approach to creating a basic monthly personal budget.

First, you need to gather the following sources of financial information, all expenses (credit cards, loans, car payments, housing payments (rent/mortgage), insurance, medical bills, medications, and others).  A helpful ideal is to go back and look at your payments over the past two to three months and make a list of them.

Second, take your list of expenses and categorize them as either essentials or extras.  Essential items are those such as mortgage or rent payments, groceries, utility bills, and or required medication/medical expenses. An easy way to look to determine if it’s an essential item or not is to answer this question “Is this something that I cannot live without to supply security and shelter to my family and myself?”  Extra expenses are those such as credit cards cable tv, gifts, eating out, gym memberships, clothing, books, and other items.

Third, find out how much you have spent per month on these expenses over the past three to six months and average the cost per item category.  You will use these numbers help you in the steps forthcoming.

Fourth, create separate lists of the average monthly costs of the Essential items and Extra Items.   If you do this it will help you should you ever needs to adjust your budget to make cuts for future expenses or changes in amounts for essential expense variation due to season or inflation.  Subtotal each category (Essential/Extra) then create an overall expense total.

Fifth, identify those expense lines/area that are flexible and easy targets for modification if cuts or reductions are needed.  Highlight them or denote them in some way.

Sixth, now gather all income that you have each month.  This may come from salary for employment, financial support from an outside source such as the government or another person, cash flow created from odd jobs and/or selling of items, and any other sources.  Look back over the past two to three months and take an average of each income source.  Add all individual average sources together to create an overall income total for the month.

Seventh, subtract your Overall Expense Total from your Overall Income Total.  If you end up with a positive number that is great you have money left over that you can save or use elsewhere.   If your number is negative, then you may need to go back and adjust your budget to see where you can cut extra expenses or create more income.

I hope this helps you get on the track financially.  If you need help with creating a budget please feel free to contact me.  I will help you set up a basic budget or guide you to a financial professional who can help your unique situation.


Terry is a Personal Leadership and Midlife Coach for Men with Upward MC in Benton, Kentucky.  He can be contacted via e-mail at  or by phone at 270-493-0967. His website can be found at


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.