PortioOpen appGuides · By the Portio team ·
How to make a budget for the first time
A first budget takes four steps: write down what you earn in a month, take out what you give, take out your bills, and divide what is left between a few goals using percentages. You do not need to track every purchase or use a spreadsheet. Type your income and your bills to see a complete budget, and try other ways of dividing it.
- Giving5%150
- Bills35%1,050
- Savings15%450
- Investment12%360
- Trips9%270
- Debt24%720
Your bills are paid as the real amount, not a guess. 1,800 is left, and every part of it has a destination.
Read the full guide
What is a budget, really?
A decision made before the money arrives about where it will go. That is all.
It is not a record of what you spent. Tracking tells you what happened last month. A budget decides what happens next month, and takes far less time.
Step 1: what do I count as income?
What reaches your account in a month, after tax. If you are paid every two weeks or weekly, add up a normal month.
If your pay changes from month to month, use a slow month as the base. A budget built on your best month fails in every other one.
Step 2: what comes out first?
Anything you give: charity, a tithe, money sent to family. Taking it first means it happens. Left to the end of the month, it depends on what remains.
If you give nothing regularly, skip this step. On an income of 3,000, giving 5% is 150.
Step 3: what are my bills?
The costs that are the same each month and that you cannot skip:
- rent
- power and water
- internet and phone
- insurance
- transport passes and regular fees
Use the real amounts from your statements, not estimates. In the example they come to 1,050.
Costs that come once a year belong here too, divided by twelve. That is explained in what a sinking fund is.
Step 4: how do I divide what is left?
With percentages, not amounts, so the plan still works when your income changes. From 3,000, after 150 of giving and 1,050 of bills, 1,800 is left.
| Goal | Share | Amount |
|---|---|---|
| Savings | 25% | 450 |
| Investment | 20% | 360 |
| Trips and fun | 15% | 270 |
| Debt | 40% | 720 |
These shares are a starting point. With no debt, move that 40% to savings and daily living. The four common ways to divide an income are compared in the best way to split your salary.
Where is food and daily spending?
In what you do not move. Everything in the steps above leaves your daily account on payday. What stays behind is yours to live on until the next one, and you can spend it without counting each purchase.
If nothing in your split is for daily living, add a line for it. A budget that leaves no room to eat is not a budget.
What mistakes do first budgets make?
- Too many lines. Four to six goals is enough. Twenty categories will be abandoned in a month.
- No room for fun. A plan with nothing enjoyable in it gets broken, and then dropped.
- Forgetting yearly costs. They are the usual reason a good month turns bad.
- Copying someone else's percentages. A rule that assumes bills are half your income does not fit if yours are a third or two thirds.
- Planning but not moving the money. The budget is only real once the transfers are made.
What do I do on payday?
Make the transfers the same day, in the order of the steps: giving, bills, then each goal. It takes about fifteen minutes. The full routine is in what to do on payday.
How do I know it is working?
Give it three months. The first one shows you what you forgot. The second lets you adjust the shares. By the third, you should reach the next payday with something left.
If the money still runs out early, the causes and fixes are in why your salary runs out.