MoneyFlowPractical guide
How to make a monthly budget, even if it's your first
The word "budget" suggests sacrifice and tables. In reality it is one thing only: deciding in advance where the money will go, instead of finding out afterwards. Done well it takes nothing away from you; it spares you reaching the 25th of the month wondering what happened.
The mistake that sinks most budgets
People start from the numbers they wish were true: "eating out, 80 a month". Then the real month takes twice that, the budget breaks in week two and gets abandoned. A budget only holds if it starts from what you actually spend today. Look first, decide second.
The budget in five steps
1. Write down what comes in
Add up the net income of a normal month: salary, pension, rent received, regular side work. If your income varies, use the lowest month of the last six: building on your best month leaves you short in the worst ones.
2. Look at what went out over the last two or three months
You need real numbers. If you have never tracked spending, download your transactions from the bank and total them by category; if you pay a lot in cash, track your expenses for a month before setting any limits.
3. Split expenses into fixed and variable
Fixed ones (rent or mortgage, loan payments, insurance) are not decided month by month. Variable ones (groceries, going out, shopping) are: that is where a budget does its work. Here is the difference, with examples.
4. Set a limit on a few categories
You do not need a cap on every line. Pick the three or four heaviest variable categories and give each a limit close to what you spend today, just slightly lower. A realistic limit you keep is worth more than an ambitious one you break.
5. Decide first how much to set aside
Savings are not "whatever is left": usually nothing is left. Treat them as a fixed expense: an amount, even a small one, that leaves at the start of the month. Then live on the rest.
What about the 50/30/20 rule?
It is a widely quoted scheme: half of income to needs, 30% to wants, 20% to savings. It is useful as a point of comparison, not as an obligation: in an expensive city rent alone can exceed half, and on a low income 20% in savings is not realistic. Use it to ask yourself a question ("how far off am I?"), not to give yourself a grade.
💡 The first month is for correcting, not for succeeding. Almost nobody gets the limits right on the first try. If you go over in a category you have not failed: you have found out the right number was a different one.
How to keep it standing
- One check a week, five minutes. Look at what is left in the categories that have a limit. If you wait for month-end, you discover the overrun when it is too late to do anything about it.
- A line for the unexpected. The mechanic and the dentist are not exceptions: they happen every year. Set aside a small amount each month and they will not wreck the budget.
- Limits that move. December is not March. Adjusting a limit is not cheating.
How MoneyFlow does it
In MoneyFlow you set a limit per category and see during the month how much of it you have used, with no sums to do. Expenses land in the right category as you type them, and every Monday you get a recap of how the week went. Categories, budgets and analysis are in the free plan.
A budget that updates itself
Set a limit on the categories that matter and watch what is left during the month. Free, no card, no bank connection.
Try it free →Frequently asked questions
Where do you start with a monthly budget?
From your real spending over the last two or three months, not from the amounts you would like to spend. Limits only make sense once you have seen where the money goes.
How many categories does a budget need?
Few. The three or four heaviest variable categories, each with a realistic limit, are enough. Capping every single line makes the budget tiring to follow.
Does the 50/30/20 rule work?
It is a good point of comparison, not a rule to follow to the letter: with high rent or low income the proportions change. It tells you how far off you are, not how well you are doing.