How to make a monthly budget in 5 steps
Updated October 6, 2026 · By the Souski team
Making a budget means deciding in advance what each euro of your month is for. Here's the method in 5 steps, with a worked example.
Step 1: add up your monthly income
Write down everything that lands in your account each month: take-home pay, regular bonuses, benefits, pension, side-job income. If your income varies, use the lowest month of the last six. You'll be pleasantly surprised in good months instead of caught short in bad ones.
Example: Emma takes home €2,100 a month. That's the base of her whole budget.
Step 2: list your fixed bills
These are the payments that go out every month no matter what: rent or mortgage, energy, insurance, phone and internet, subscriptions, loan repayments. Go through your last three bank statements so you don't miss any, especially subscriptions that renew quietly.
Emma pays €650 rent, €70 energy, €45 insurance, €35 broadband and phone, and €30 of subscriptions: €830 of fixed bills. She has €1,270 left: that's her money left after bills.
Step 3: decide your savings before anything else
The classic mistake is saving whatever is left at the end of the month. Flip the order: set a savings amount now and treat it like a fixed bill, with a standing order on payday. Even €30 a month builds the habit.
If you don't know how much to aim for, the 50/30/20 rule suggests 20% of income. Emma starts more gently with €200 a month.
Step 4: split what's left into spending limits
What's left after fixed bills and savings is shared between your day-to-day spending. Create one pot per category that matters to you: groceries, transport, eating out, going out, shopping, health, gifts.
Emma has €1,070: €320 for groceries, €120 transport, €80 eating out, €70 going out, €70 shopping, €30 health, €20 gifts and €40 miscellaneous. She keeps a €320 buffer for the month's surprises.
The goal: every euro has a job. Income minus bills, minus savings, minus spending limits should come to zero, or to a buffer you've chosen.
Step 5: track your spending during the month
A budget you don't track is just a wish. Log each expense in the right category as you make it, and check regularly what's left in each one. When a pot is empty, you have two choices: stop spending in that category, or take from another one knowingly.
At the end of the month, compare planned with actual and adjust the amounts for next month. It usually takes two or three months to find realistic limits.
Which tool to track your budget?
- Pen and notebook: simple, but no automatic calculations.
- A spreadsheet: complete and free. You can start from our free budget spreadsheet. It's less handy on a phone.
- A budgeting app like Souski: you log an expense in 5 seconds and what's left in each category updates by itself.
Your budget ready in 3 minutes, your spending logged in 5 seconds. Free, no bank connection.
Frequently asked questions
How long does it take to make a budget?
Allow an hour the first time to gather your statements and set up your categories. After that, a few minutes a week is enough to track your spending, plus fifteen minutes at the end of the month to review.
Should I log the really small purchases?
Yes, at least for the first month. Coffees, snacks and small online orders go unnoticed one by one, but they often add up to a lot.
What if I go over budget in a category?
Make up for it in another category the same month, then adjust the planned amount next month if it was unrealistic. A budget is there to help you decide, not to make you feel guilty.
This guide gives general pointers and isn't personalised financial advice.