Let’s talk about how to make a budget built by you, FOR you.

Approximate read time: 8 minutes

You could google “how to make a budget” right now and you’d probably come up with 100s of options. Some will be free, some will be subscription-based, but none of them will be built for your life.  Which means that eventually, they will fail you.

“How to make a budget” goes beyond just a plug-and-play form you fill out

Think about your local corner store.  Would you expect that they could successfully copy and paste the budgeting expectations from a chain restaurant on the same street?  How about another corner store two towns over?

Of course not. Every budgeting system, whether it’s for a multi-billion dollar company or your household must be built specifically for THAT entity. And it must change over time. So how can we use the same model that businesses use?

Image of a woman using her laptop to create a budget. Learn to create a budget to create stability with your money with the help of financial coaching services in California, New York, Texas, or anywhere in the United States.

The Modified Zero-Based Budget

Zero-based budgets (ZBB) have been used by governments and huge corporations since the mid-70s. No one should be intimidated by that though. ZBBs are a pretty straightforward pre-plan for the way cities, companies, and households allot their money. The purpose of creating a ZBB for our personal finances is foremost awareness, then to create the first version of a plan that will change with you over time will be made BY you and FOR you. My purpose as a coach is not to tell my clients what to do, or even hold them accountable, I’m just here as a guide. Like all of the Pacific Stoa curriculum, this process must meet four guidelines:

Your budget must:

-get easier to use over time
-be custom-built for your life
-not make you feel like garbage when you use it
-It must ACTUALLY work

Imagine the spending plan that a large multi-national car company uses right now and give it to the City of San Diego. Would it work? No, of course not. Let’s say I take the plan that the car company used in 1985 and give it to the same company today, how would that work? Not well… the company and the world economy have evolved and changed in the last 35 years.

Each time you go through your ZBB it gets a little smoother and a little faster. In just a few rounds, instead of taking an hour to prep this, it should take you about 10-15 minutes per month.

Making a Budget With a Financial Coach

How to Make a Budget: Step 1: Tracking, But Different

Tracking is its own skill, and I encourage my clients to track for at least two weeks prior to building their first ZBB as we need that data, but I encourage tracking very differently than you probably have before.

There are some surprising dos and don’ts to track, I recommend reading through the article on tracking.

How you make a budget largely depends on how firm your tracking routine is!

How to Make a Budget: Step 2: Bucketizing/Categorizing

We’re going to capture everything you spend money on in an “average” month. The caveat here is that there is no such thing as an “average” or “normal” month, so we’re just going to try to get as close as we can.

The source of the money doesn’t matter, and it doesn’t matter if you spend it as cash, credit, debit, etc… if it leaves your pocket, we’re going to account for it.

As we go, we’re going to be categorizing your spending into categories or buckets. You’ll be deciding how to categorize your spending. Imagine there’s a whole bunch of little buckets laid out on a table, the buckets are your categories. Let’s say I have a bucket here with money in it. I am going to take money out of this bucket and use it for gas for my car. What do I call this bucket?

Do I call it GAS? Or do I call it the car bucket? Do I call it the purple bucket? Bucket #1? It doesn’t matter, as long as my family and I all know that gas comes out of the bucket called Gary, or whatever. You are doing nothing less than creating your own money language. It makes no difference if it makes sense to anyone else as long as it makes sense to you and your household.

Rules for Buckets

  1. You have to have at least three buckets.
  2. No “misc.”, “other,” “spending money,” (all money is spending money), “Hanna’s things,” buckets. “Miscellaneous” buckets are where people try to hide things from themselves.
  3. NO WANTS VS NEEDS. No good or bad spending buckets. Judgment is not allowed in this process, we are simply trying to get an honest snapshot of your spending. I don’t care if you have a bucket called “Gold Plated Door Stoppers” as long as we’re capturing everything.
  4. Buckets can be changed as we go, nothing is fixed in stone.
  5. EVERY BIT of your spending needs to be in a bucket.
  6. We aren’t worried about dollar amounts at this step, just categorizing what you spend money on.

Bucket prompts

(no precise order)

-Go back in time a little, What’s the last thing you spent money on? What bucket would that be in?

-What’s something you think you might recently spend money on?

-Does that go in an existing bucket or do you want it to be in its own bucket?

-Which bucket would car insurance go in?

-Which bucket would cleaning supplies go in?

-Do groceries and eating out go in the same bucket?

Here’s a screengrab of an actual family’s buckets. In their case, they were also playing with the idea of color coding, but they chose not to after trying it out. Messiness is welcome at this stage in the process.

Graphic that explains the family bucket process. Learn to effectively set a budget with the help of a financial coach to create stability with your money. Find support with financial coaching in California, New York, Texas, or anywhere in the United States.

How to Make a Budget: Step 3: Planning

Choose a timeframe you’d like to plan for. I recommend two weeks for the first round and then moving it up to a month. I do not recommend attempting to plan for more than a month at a time with this tool. (Longer-term tools and strategies are available through the Pacific Stoa Curriculum.)

For each bucket:
How much do you expect to spend or devote to that bucket?  This is just the first round, so it’s okay if this is a rough estimate. This is where tracking is helpful as background data.

From 4/19/2019 to 5/18/2019

Bucket NameExpectation #1Expectation






Emergency Fund200100118
Groceries and Staples800800675
Personal Hygiene502525
5. Total$2,958$2,688$2,481
Over/Under+ $477+ $2070


  • Income- How much do you plan to have coming in for income during this time period?

We’re counting ALL kinds of income. For this family, they’re expecting $2,481 in income for this month. In this family’s first round, their combined buckets equal $2,958, so they needed to remove $477 from the buckets. They’re much closer on their second round, with only $207 left to go!

In their third round, they had a lengthy conversation about where to pull that last bit from, They decided they’d leave a little in the furniture bucket just in case they needed something, see if they could do with less in the grocery bucket, AND put a little back in the emergency fund bucket.

Once the amount expected to be spent in all buckets matches what is expected for income TO THE DOLLAR the first ZBB is done!

How to Make a Budget: Step 3: Tracking

As we talked about above, this is where having a tracking routine in place really helps. Most of my clients have a notebook of some kind for this step, but I’ve seen people do just fine with index cards, google sheets, or Excel. Experiment a bit with the logistics of this… do you like a big notebook or a little one? Notes on your phone?

Generally, each bucket gets a page in the notebook, or an index card. Each bucket is set up as such:

Images of a scrap of paper that creates a budget. Struggling to manage your money? Learn how to create a budget with the help of financial coaching services in California, New York, Texas, or anywhere in the United States.

As the family spends throughout the month, they are “removing” money from that bucket… this way they always know how much money is left in that bucket. Before this family made their water/sewer/garbage payment this month they had $80 left in this bucket, but the WSG bill was $92.

So this is where developing a shared money language comes in handy. Where does this $12 come from? In this case, they decided to pull it from resources as they hadn’t needed as much gas as they thought.

This family also leaves notes in their buckets, which most people do but is not required. So in their “Resources” bucket, they left themselves a note that they “moved” $12 over to “Bills”.

As you make your own custom budgeting system, you’ll find that you will adjust how much information you’re writing down depending on what is important to YOU. I don’t routinely write down the store at which I’m spending, but for some people that’s important. Remember that these notes are for a future version of you!

How to Make a Budget: Step 4: Review and Restart

This is important. The first time you run through this ZBB, it WILL BE A HOT MESS. I have rarely had anyone go through their first ZBB without something that threatened to destroy the whole plan they just made.  Iteration is critical to making a budget that will work with and for you over time.

The first few run-throughs are for gathering information. For this reason, I advise that you not try to change your spending habits. You are creating a changeable, living system that will evolve as your life does, and to do that, we need good, honest data.

Closing Thoughts on How to Make a Budget:


Frequently I’ll have clients wanting to wait to start their ZBB until payday or the 1st of the month or some other benchmark, and that’s fine, but if they wait, they frequently won’t start at all.  That’s it’s not because they’re bad people or because they aren’t making their financial health a priority, but because life happens. And it always will. So right now, get any piece of paper and start making buckets. Don’t even worry about starting with tracking, just put your spending into buckets. Consider starting Financial Coaching Services! I promise that developing your own ZBB system will suck for a little bit, but it’s much easier than you expect!

Balance structure and grace

The perfect ZBB will be a nice blend of structure and flexibility. Every month is different, and that’s a good thing. I don’t want your life to be the same forever, which means your pre-planning has to be able to evolve and change with you. The structure is a way to carry forward your goals. It’s you making sure future versions of yourself understand what’s important. The structure of your ZBB is instructions from the past.

The flexibility is grace for your future self. There WILL be emergencies that sneak in under your radar and try to derail you, but there will also be opportunities. Allowing yourself some grace means that you can take advantage of those opportunities as well as handle emergencies. Grace is necessary for change.

Next Recommended Article: Tracking: Burn the Receipts

Last updated: September 2023

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Other Services Offered at Pacific Stoa

At Pacific Stoa, I want to make sure you have everything you need when it comes to managing your finances. So in addition to helping individuals learn to create budgets to help with financial stability, I also provide Financial Coaching for CouplesFinancial Coaching for Divorce and Separation, and Financial Coaching for Families. I also offer Financial Consulting for Nonprofits and Businesses to help create a customized strategy built specifically for you, your organization, and those you serve. Check out my FAQ to learn more about Financial Coaching and my Blog!