5-minute read.

We all want to create a budget that we can actually stick to. Have you kept up with your money goals this past month? Maybe you had a checklist and celebrated some money wins. Maybe the month got away from you and the budget was completely out the window. Or maybe you felt so overwhelmed that you avoided looking at your money altogether.

If you fall into the overwhelmed camp, you are not alone. I still to this day can get stressed about money. I did so last week! This is why I create a budget. So for today, I want to walk through how to do a money audit with your spending and create a budget that you can actually stick with.

Create a budget by taking an audit of your spending first.

Before you create a budget: here’s how to audit your spending


First off, what the hell is a money audit? A money audit looks at your spending history. Three reasons a money audit helps your financial growth:

  1. You get a better picture of where your money is going.
  2. You identify the big expense culprit. (What is draining your bank account each month?)
  3. You can more accurately estimate spending categories for your budget.

The way you do this is by going into your bank account and credit card account and look through the past 2-3 months of spending.

If you are a cash-only DFM’er then you want to look at your receipts. If you haven’t kept those around, you need to start tracking everything in your budget moving forward.

What my budget actually looked like for January 2018.

STEP 1: Create a Budget

Start by opening up your budget spreadsheet. You can use the one in the Debt Free Millennials Budget Toolkit, or use your own. But I’ve already got the cells put together in the toolkit to speed up the process for you. This should take just a minute for you to download so you can create a budget for yourself.

Keep it easy on yourself with a budget spreadsheet. No fancy, expensive apps. Just you telling your money where to go.  It’s all in the Budget Toolkit.

STEP 2: Give your best guess at how much you spend

Under the “MONTHLY” column, give your best guess at how much you spend in each category. Things like rent, cell phone, and Netflix will be the same, but try to give your best guess at how much you spend on groceries, restaurants and clothing. This should take you about 5-10 minutes.

How much do you think you spend at restaurants each month? Add it to the monthly column in your spreadsheet.

STEP 3: Log on to your bank and/or credit card accounts

Open up a separate window and log on to the account where you typically put most of your purchases on. That may be your debit card or credit card, so log on to the appropriate account.

Have a Chase card and use it to make purchases? Log on to look up your transactions. It’s the only card I use! (This link is an affiliate link.)

STEP 4: Look at one month of spending at a time

Using the date range finder, take a look at last month’s spending. Put in January 1 through January 31 and you’ll see a running list of everything you have spent for the month.

STEP 5: Record what you actually spent

Working backwards, log all of your spending into the budget spreadsheet for the previous month. What you actually spent is going to be recorded in the spent column. Use the = and + symbols to keep adding to the category. This should take you about 10 minutes to do for each month.

Repeat this step for the previous three months. I choose three to audit because it helps me get an average of each spending category and get rid of any outliers. I recommend skipping December if you’re a big Christmas shopper and go into November and October of last year to audit, again using the date range finder inside of your bank or credit card account. When you move on to a new month to audit, open that month’s tab on your spreadsheet and input your spending there.

Use = and + symbols inside of the spreadsheet to keep a running total of each spending category.

STEP 6: Take an average of your spending

Once you have taken a record of your spending for the last three months, you will take an average of each spending category to get your budget estimate. You might be extremely shocked to see how much you’ve spent. I recently did this for my grocery budget:

Why on earth did I decide to lower my grocery bill by $100 in November is beyond me. I mean, c’mon. Thanksgiving. Duh.
Over those three months I was able to see that I spent the following in my grocery budget: OCTOBER = $471.38 NOVEMBER = $689.23 JANUARY = $381.25 I took the average of these three months: ($471.38 + $689.23 + $381.25) ÷ 3 months = $513.95 Now I know that I spend roughly $500/month in groceries for my household (1 adult male, 1 adult female). This is my number to beat. Yours may be different!

STEP 7: Create a budget for next month

Looking ahead, make a clean copy of your budget template for 2018 and add those averages into the monthly column for the next month. Make any necessary adjustments based off of your income and your money goals. Then, stick to it!

A little beer while you budget is not a bad idea. In fact, I heard that beer is proof that God loves us and wants us to be happy. Even in our finances.

The audit should take about an hour to complete. Create your budget and give the money audit a shot. Let me know in the comments how you did.

I go into a lot more detail about setting up your budget inside of the Freedom Project course. Ditch debt and become a better millennial money manager! Inside the course, I teach you:

  • Debt Free Mindset
  • Saving For An Oh Sh!t Fund
  • Make Budgeting Your B!tch
  • Ditching Debt

Being a debt free millennial isn’t something achieved overnight. Discipline, a little budgeting and a really great debt free program can kick you into money mode.

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