A budget is not a punishment. It is a plan that tells your money where to go, instead of wondering where it went. In this lesson of Mondosol’s Make Money course, Amara walks you through your very first budget in five simple steps.
Read the article, watch the videos, or press play and listen. You only need a notebook, a spreadsheet or a notes app.
In this article
Why a budget helps
- You see exactly how much comes in and goes out.
- You stop running out of money before the end of the month.
- You can save for goals on purpose, not by luck.
- Money becomes less stressful, because there are fewer surprises.
Your first budget in 5 steps
Step 1: Write down your income
Use your net monthly income: the money that actually lands in your account after tax. Include wages, student support and regular side income.
Step 2: List your fixed costs
These are the same every month: rent, phone plan, transport pass, subscriptions, insurance.
Step 3: Estimate your variable costs
These change: food, going out, clothes, gifts. Check your bank app for the last two or three months to get a realistic average.
Step 4: Pay yourself first
Decide how much to save before you spend on wants. Even a small amount counts. Move it to a savings account on payday.
Step 5: Balance and adjust
Income minus costs minus savings should be zero or more. If it is negative, cut wants first, then look at bigger costs.
A worked example
Here is an invented example of a monthly budget with 12,000 kr net income:
| Category | Type | Amount |
|---|---|---|
| Rent (shared flat) | Fixed | 5,000 kr |
| Food and groceries | Variable | 2,500 kr |
| Transport pass | Fixed | 600 kr |
| Phone | Fixed | 300 kr |
| Fun and going out | Variable | 1,500 kr |
| Clothes | Variable | 500 kr |
| Savings | Pay yourself first | 1,600 kr |
| Total | 12,000 kr |
Every krone has a job, and the total matches the income. That is called a zero-based budget.
Tips that make it stick
- Keep it simple. Five to eight categories are enough to start.
- Check in weekly. Ten minutes on Sunday is better than one big panic at the end of the month.
- Add a buffer. A small “surprises” line for things you forgot.
- Be kind to yourself. Your first budget will be wrong. Adjust it next month.
Watch: budgeting for beginners
Video: “How to Make A Budget | Budgeting for Beginners” by Elena Taber, on YouTube.
Video: “How to Make a Budget | Beginner’s Guide to Budgeting” by Lindsey Hughes, on YouTube.
These videos use US dollars and US examples. The steps work the same in any currency.
Try it: Amara’s 20-minute budget
- Set a timer for 20 minutes.
- Write your net income for one month.
- List every fixed cost, then estimate your variable costs.
- Choose one savings amount and write it before your wants.
- Check the total. Adjust until it balances.
Amara’s rule: “Put it in the spreadsheet.” Then look at it again next week.
FAQ
What is a budget in simple words?
A plan for your money: how much comes in, and where each part will go.
Should I budget with gross or net income?
Net income, because that is the money you really receive.
How much should I save?
There is no single right number. Start with an amount you can keep every month, even if it is small, and raise it over time.
What if my budget does not balance?
Cut or reduce wants first, then look for cheaper options on your biggest costs such as rent, food or transport.
Do I need a special app?
No. A notebook or a simple spreadsheet works. Apps can help later.
Keep learning
- Practise it: open the interactive Make Money lessons in your learning journey.
- Next lesson: The 50/30/20 Rule: an easy way to split your money.
- Previous lesson: Module Review: Money Basics.
- Related: Needs vs. Wants.
This article is educational and is not financial advice. Amara is a fictional character from the Mondosol cast.
