If you’ve been avoiding budgeting because it feels overwhelming or too restrictive, you’re not alone. Many people think that budgeting means giving up everything fun, or they’ve tried it in the past and couldn’t stick with it. But here’s the truth: a budget is just a tool to help you take control of your money and align your spending with what you care about most.

You don’t need to be a financial expert to start—you just need a clear plan and the commitment to take action. Imagine being able to enjoy a night out without the anxiety of overspending. That’s the power of budgeting. Ready to finally get your finances on track? Let’s dive in!

1. Gather Your Documents

Time to assess your starting point. How do you feel when you look at your finances? Overwhelmed? Hopeful? A mix of both? It’s time to embrace your financial reality, no matter where you stand today.

Most women are not where they want to be financially. There are probably a lot of past mistakes and regrets you have to forgive yourself for. I remember feeling ashamed of my credit card debt; facing it was the first step toward change for me.

This isn’t about judgment; it’s about clarity. It’s time to honestly face your reality. Where are you right now? Understanding your current position is crucial in mapping out the journey ahead.

Start by gathering all your financial statements pertaining to your income and expenses—bank accounts, bills, and pay stubs. If you have digital records this step is even more simple.

2. Examine Where Your Money Has Been Going

Review your past spending to see exactly where your money has gone. This step is about identifying patterns and habits. You will track spending by category (e.g., groceries, utilities, entertainment) to understand where your money goes and identify areas for potential savings and adjustments

You want to review at least one month, preferably the last 3 months, to figure out your spending habits. This will take some time so set aside a few hours to complete. It’s important to invest this time in yourself and your financial future. It will pay dividends down the road. This will allow you to plan based on facts, not ideals. Maybe your homeowners and car insurance are close to $200 a month. You think you should only be paying $100 a month. There is no magic way to lower your cost just by putting an ideal amount as a budget line item. You have to do the work to lower your expenses and then you can adjust the budget accordingly.

You need to look through all of your account information you gathered in the last step. Decide how you will tabulate your info. You can use pen and paper, create a spreadsheet, or download your data into an app. I used a simple spreadsheet so the computer could do the math for me.

Go through each account and make a list of how much and where you spend money. You want to be detailed enough to be helpful and spot patterns but not overly detailed. An example is food. You do not need to know how much you spent at Starbucks versus Dunkin. That’s too much time-consuming and irrelevant detail.

Continuing with the food example, you want to have categories that show how much you spend on your day-to-day food. You will find it helpful to make a category for groceries, which includes everything you buy to prepare at home, and another meals out which can include lunches, fast food dinners, DoorDash, and coffee. Special occasion meals are better tracked as part of entertainment.

This is an eye-opening exercise. I suspect you will find out two things. One is you will discover that small daily expenses are adding up. We tend to brush off low dollar amounts here and there. Things like the vending machine at work, an extra tip for the barista, all the subscription services, or an impulse purchase at Target.

The other thing you will discover is how much money you can not pinpoint what it was used for. Often this is for big box stores or warehouse clubs where you can get a little bit of everything. You may need to have a category for this store for a bit until you can sort out what you are buying there. For me, it was a warehouse store. I buy groceries, gas, gifts, household items, prescription and OTC meds, eyeglasses, tires, my microwave-you get the idea, the list goes on and on.

One of the reasons budgeting can seem hard is we have so many variable expenses. You have variable expenses that usually repeat on a fairly regular schedule, like utilities and groceries. This is why you want 3 or more months of data so you can calculate an average for regular variable expenses. This is just a starting point. As you go on, you will become more accurate in estimating realistic amounts for each category.

Irregular variable expenses are also hard to budget for. To get an idea of your spending, quickly scan through the last 12 months of documents to look for irregular or annual expenses. Make a list of who you pay, how much, and how often. Examples include annual subscriptions, quarterly tax payments, or car tag renewals. For instance, if you have a yearly Amazon Prime subscription, that can catch you off guard if you forget to budget for it. Forgetting to account for these types of expenses is one of the top mistakes women make when trying to set up a budget that works. 

Approach this step with the mindset of information gathering, not judgment. You need to know where your money has been going if you want to redirect it to align with your goals. After completing this step, you should have a clear list of your income, expenses, and financial obligations.

3. Create Your Budget Plan

Start by listing all your income from all sources. If your income is variable, figure out an average. You want an estimate of how much you bring home each month.

All the categories you listed in the previous step give you an idea of what you usually spend in each. Now it’s time to break down your income and start assigning it to the categories.

Allocate funds for necessities first—shelter, food, utilities—and then discretionary spending, like coffee and entertainment. The remainder is directed toward paying off debts and for savings goals. Aim for a zero-based budget, where every dollar is accounted for.

You should see right away some places you can cut or save to redirect money toward your goals and bring your spending in alignment with your dreams. If the numbers show you have more expenses than income, this list will help you realize where you should cut.

This step isn’t about cutting out all joy in your life; it’s about making informed choices that redirect your money to align with your goals. Your budget should reflect your unique needs and aspirations while being realistic and sustainable.

Remember to allow yourself some pleasures. Setting up unrealistic spending targets is another of the top mistakes women make when doing this exercise. It’s tempting to do so, especially if you have big financial goals or a lot of debt to pay off. Think about it: if you love coffee, cutting out your daily latte completely might lead to burnout. Instead, consider making it at home a few times a week.

An example of where most women waste copious amounts of money is on everything food-related. Groceries, fast food, snacks, going out, and meal delivery kits are all food-related expenses. If you are shocked to discover the amount you have been spending here, you should make changes by all means.

However, if you vow to follow one of these extreme budget $24-a-week meal plans on YouTube, you will not be able to. I doubt you have the pantry stockpile, meal-planning knowledge, baking skills, and time required to succeed. Might I suggest a more reasonable approach is to replace one or two trips through the drive-thru with 15-minute semi-homemade meals? Develop your meal planning and prep acumen as you go and gradually cut that expense as your skills increase.

Remember, this budget isn’t set in stone; it’s meant to be adaptable and should develop over time as you gain more feedback and experience.

4. Implement Your Budget

Creating a budget is only the beginning—implementing it is where the real changes begin. It doesn’t have to be overwhelming. Once you’ve set up your budget, the key is to follow through and ensure you’re sticking to the plan.

The last step was to create the plan. To put it into action, each payday you need to take a few minutes to review what bills you have to pay, how much you have targeted for variable expenses like gas and groceries, and assign the remaining amount.

Let’s imagine you have $500 left over after you cover the expenses for this pay period. That does not mean you can afford to buy a new rug for the living room! Instead, see what obligations are on the horizon and plan accordingly. Maybe you can make an extra credit card payment, or put it in your vacation savings fund, or you know it’s time to buy new tires. Assign a purpose to the extra funds based on your needs.

The point is all your money is allocated to a meaningful purpose so none gets frittered away. You are taking a longer view so you can be more prepared to geet the future. This is the beauty and magic of zero-based budgeting!

You need to check in often with yourself so you remain aware of where your money is going. Spend a few minutes daily as you are starting out. You can taper off to weekly check-ins once you become more adept at staying mindful of your money. I found that setting a reminder on my phone helps me stay accountable. It takes time for this process to become second nature. Go easy on yourself during the learning curve!

You have to have a plan to control your discretionary spending (like dining out, shopping, or entertainment) and the variable everyday expenses (like grocery shopping and filling up your gas tank). This is another super common pitfall many women encounter that derails their budgets.

How can you have easy controls? You can use cash, a debit card, or a designated credit card. Personally, I have a debit card tied to a separate bank account that is used only for these categories. When the money’s gone, it’s gone. Built-in control.

Some people choose to use cash. If you can work going to the ATM into your weekly routine, this may be a good option for you. The beauty of this method is the built-in control. Again, once the money is gone, it’s gone. It has the added benefit of having money in your pocket in case of emergency

Plus, there is something about the physicality of cash that makes people more aware of their purchases. Studies have shown people commonly spend 30% more when using a credit card! I haven’t seen stats, but I bet debit card usage causes a similar phenomenon.

I do not recommend using a credit card, especially if you have existing debt or a lack of self-discipline in this area. It is too easy to just say charge and then not have the money in the bank when the bill comes in, despite your best intentions.

A way around the credit card trap is to immediately make a payment to your credit card company every time you make a purchase. Yes, you may end up with 10 payments in one month. But imagine the relief when you get the bill and your balance is zero! This method can help you avoid the stress of accumulating debt while still allowing you to use credit responsibly.

Consistent tracking of all your money is critical to staying on budget. My advice is to automate as much as possible. Take advantage of your bank’s bill payment options to pay your regular monthly bills. If you find budgeting apps you like, use that to keep track of your spending for you. If you use a spreadsheet, or even a simple notebook to record expenses, set aside a regular time to work on your tracking.

Life never happens exactly as we plan it! That’s why it’s so important to keep a close eye on your money. Adjustments will always be needed; this is normal and part of the process. Life changes and your budget should adapt to reflect new priorities or unexpected expenses.

5. Align with Your Long-Term Financial Strategy

Creating a budget isn’t a one-and-done task. Just like your life evolves, so should your budget. It’s essential to regularly review and adjust it to reflect changes in your priorities, goals, and financial situation. By making this a habit, you ensure that your day-to-day spending stays in line with your broader financial vision.

Each month, evaluate what worked well and what didn’t in your plan. Habitually review and adjust your categories and behaviors as necessary. If something is not working, brainstorm different approaches.

Life happens. Perhaps unexpected expenses arose, like an emergency vet bill you didn’t plan for. Or maybe you found extra money by finally selling some items online. You will experience fluctuations, both positive and negative in your budget.

The more you stick with it, the more natural it will become. Over time, you’ll feel more in control of your money, and that sense of confident empowerment will make it easier to stay consistent.

Your budget is about more than just keeping track of what’s coming in and going out. It’s just one part of the bigger picture—the strategic plan that you’re using to guide your financial future.

Ready to know how budgeting fits into your total strategic financial plan? Check out my post on Creating a Personalized Money Plan to learn how all the pieces—budgeting, saving, investing, and more—work together to help you achieve lasting financial success.

Start Now!

Then now is the time to collect your financial information and begin creating your budget. Proceed with each of the five steps to start addressing your financial overwhelm. 

• Gather
• Examine
• Create
• Implement
• Align

You’ve got this! These actions will jumpstart your journey to financial freedom, help you get out of the overwhelm, and empower you to take control of your financial future with confidence and clarity.