How Do I Create a Monthly and Yearly Budget?

Track your pennies and watch them grow.

Track your pennies and watch them grow.

Financial planning takes dedication. Preparing, creating and executing a budget will guide your spending decisions in a positive manner, as long as you don't put too many restrictions on where your dollars go. Monthly budgets are just a smaller portion of a year and factor into your yearly budget. Once you've learned the necessary steps to a successful monthly budget, converting to a year is easy.

Prepare the Budget

Track all of your expenses for one month and record them on paper.

Review unexpected expenditures for the previous year. These expenses include major vehicle repairs, appliance repairs and replacement, splurges, and unexpected medical bills. Don't deprive yourself of all your splurges. Mint.com suggests "working your indulgence into your budget."

Total your unexpected expenditures and divide that number by 12. This will give you a rough estimate to account for in your budget.

Create a Budget

Write down your net income from all sources.

Categorize your expenses into household expenses, transportation, discretionary expenses, debts and savings.

Crunch the numbers. Add up all of your expenses and subtract that number from your income totals.

Evaluate the totals and adjust your budget categories until you are satisfied with your free spending and required spending amount.

Execute the Budget

Reference your budget regularly for upcoming payments, bonuses, and foreseeable expenses to plan accordingly.

Evaluate your spending habits monthly and watch for areas where you tend to overspend.

Adjust your budget to fit your lifestyle and financial goals.

Allow three to six months to work out any issues within your budget.

Convert your monthly budget into a yearly spread by multiplying your figures by 12.

Items you will need

  • Receipts
  • Calculator
  • Paper
  • Paystubs
  • Records of additional sources of income


  • Divide quarterly and semiannual payments into manageable monthly totals. Add that amount into your savings account so you don't have to scramble to make a payment.
  • Pay yourself first. Treat contributions to your savings account as a regular expense.

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About the Author

Mysti Guymon-Reutlinger began her writing career in 2006. Her work has appeared in publications including "Migraine Expressions" and online for Animal Fair and CraftingFiction.com. Mysti is currently pursuing a degree in communications in Wyoming.

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