Why You Need a Written Budget (And How to Create It)

With so many digital budgeting options, it can be easy to ditch the idea of a written budget. Because the digital format removes some of the hassles involved with creating a budget, we lose out on some of the benefits that a written budget can provide. In addition to a written budget, you should also plan to create a transaction log to keep up with your expenses.

In this post, well explain how a written budget and spending tracking can help you to take control of your finances and what you can do to get started.

What is a Written Budget and How to Create One

A written budget is simply a budget that you write. It all starts with a piece of paper and a pencil (or pen, if you don’t make mistakes). To create a budget follow the steps below.

Start by writing down all of your income sources. It’s most common to create a monthly budget, so write down your total income from all sources for the month. This is not limited to only your primary source of income (like a job or business), it should include all of your sources of income combined into one number.
Next, you should write down all of your monthly expenses. The best way to do this is by looking through bank account and credit card statements over the past few months to determine your spending habits. Some items, like your internet and phone bill, you might know off the top of your head, but other expenses like groceries or gas for your car, you can estimate based on your previous spending. This should also include any debt and interest payments that you have, like a car loan or student debt payments.

Once you have written down all of your expenses, you should group them into categories. For example, if you typically spend $50 per month on going to the movie theater and you spend another $100 per month on sporting events, you should group these items in a category with a unique name like “Entertainment”.

Now that you have grouped all of your expenses into different categories, it’s time to create your budget. You should determine how much you would like to allocate to each category so that all of your income is allocated for, this should include any savings also. Start by using your current spending habits for each category. Then subtract your total expenses and savings from your income.

Are you in the red? This could be a problem. It’s time to revisit the 3rd step and reduce some of your monthly expenses. You might need to dial back on things like entertainment or dining out in order to keep your budget balanced.

Do you have leftover money? Great, but this money needs to get allocated somewhere. It’s best to add it to your savings category or if you have debt, you could use your leftovers to pay it off earlier.

The goal of zero-based budgeting is to have $0 left at the end of each month. If you have extra, you should aim to save it or use it to pay off debt. If you are in the red, you’ll need to revisit your budget and trim any unnecessary expenses to keep it balanced.

The Benefits of a Written Budget

A written budget forces you to look at and write out how you are allocating your money, as opposed to a digital budget where it might be allocated for you based on a computer algorithm or spending patterns. 

By writing things down, they are more likely to stay on your mind, which makes avoiding unnecessary spending that much easier on your next trip to the grocery. Many studies have proven that by writing your goals down, you are greater than 40% more likely to achieve them and it’s no different when it comes to budgeting.

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Why You Should Track Your Spending in Writing?

Once you have completed your written budget, it’s time to start “doing”. As you go through your day to day life, you should write down each time you spend money. By doing this, you’ll be able to easily hold yourself accountable for each dollar you spend. It is easy to deny cravings if you know you will have to physically write down (or type) that you spent money on dining out, drinks at the bar, etc.

NOTE: You do not need a physical journal, a spreadsheet is also an appropriate way to keep track of your spending as long as it is not automated.

A great way to track your spending is to create a spreadsheet with a few different columns. “Location”, “Category”, and “Total Amount” are perfect to get started. Each time you swipe, spend cash, or make a payment, fill in your spreadsheet with these details.

At the end of the month, you should look at your transactions to know where you are spending the majority of your money. If you find that you regularly run to the gas station and pick up some snacks, you’ll be able to see how much this is costing you each month and alter your habits to avoid this spending.

For many, they might swipe their credit card, pay their bill at the end of the month, and never look at how they are spending their money. This can be very dangerous and cause you to develop bad habits for your finances. It’s always important to look at how you spend your money at the end of each month. You can even break it down by week to get a better idea of what might be causing any unnecessary spending.

Use a Digital & Written Budget Together

If you’re struggling to keep up with your finances after you’ve created a written budget, you can always use a digital budgeting app to help you. This can help in scenarios where you aren’t sure how much money you have left to spend in a certain category at any moment. Many apps can detail how much you have left for the month based on your current spending.

NOTE: You should keep your written budget a priority if you plan to use a digital budget alongside.

What if Budgeting Doesn’t Work for Me

Some people claim that budgeting does not work for them. And while it may not be easy for some, budgeting does work for everyone. If you find that your budget is not working for you, there are a few things to consider trying before ditching your budget altogether.

Revise Your Spending

One of the main reasons people claim their budget is not working is because they continuously overspend on select categories like groceries or fuel for their car.

If you find this to be a problem, you should revise how much money you have allocated to those categories and adjust your budget accordingly. For example, if you commonly spend $50 more than your allotted budget on groceries, add $50 to your grocery budget and deduct $50 from another category in your budget that is less necessary, like dining or entertainment.

Pick up a Side Gig

If you cannot make your budget work given your income and expenses, it might be time to pick up a second job or side hustle. Whether it’s driving for Uber or flipping furniture, there are many different ways you can’t make a couple of hundred extra bucks per month which might keep your budget on track.

Related: Success Is The Best Revenge

Lower Interest Payments

For many, debt and interest might be the reason you initially decided to start budgeting but it can create huge problems when it comes to balancing your money. If you are consistently having to pay hundreds per month in interest, you should try to create a plan to eliminate (or lower) this debt in order to balance your budget.

One of the best ways to accomplish this is by refinancing your debts to a lower interest rate or longer term. While we don’t typically recommend the sound option, by refinancing your debts to a longer-term, you can dramatically lower your monthly payments, making your budget easier to handle. If you have a nice chunk of cash (whether it’s a savings account or tax refund), you could consider refinancing and using that money to lower your overall amount owed. This will lower your payments with the possibility of keeping the length of your loan the same.

When refinancing any debt, it’s always wise to ensure you have a credit score that will ensure a better or equal rate. Not doing so beforehand can result in a more expensive loan and an unnecessary hard inquiry.


Creating a budget should be a priority for your finances, yet many of us choose not to take advantage. It can help you to pay off debt, save money, and take control of your life.

By creating a written budget and keeping a log of your transactions you will be more likely to stay on track with your money as opposed to many of the digital options available.

Do you have experience with a written budget? Tell us your thoughts below!

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Forrest is a personal finance, entrepreneurship, and investing enthusiast dedicated to helping others obtain life long wealth. He owns several different blogs and is also passionate about health and fitness.

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