Recently, I turned 30 years old, and over the past decade I’ve gone from living paycheck to paycheck and saving 0% of my income to having a monthly savings rate that has gone up to as high as around 60%.
I know that’s a high number, and I don’t say that to brag. I truly believe the main reason I’ve been able to do that is because I built out a super simple but effective budgeting method that I’ve been very consistent with over the years.
This budgeting method has essentially allowed me to run myself like a business. It’s the core reason behind how I was able to figure out exactly what I had to do to both increase my earnings and decrease my spending.
The goal here is simply to help increase your savings rate in a way that’s meaningful to you and your financial situation.
How the Budget Is Structured
The budget is split into four sections:
- Income Budget
- Expenses Budget
- Actual Income
- Actual Expenses
At the beginning of every month, start in the Income Budget section and enter the different types of income you think you’re going to earn based on what you’ve earned in previous months.
This can include:
- Paychecks
- Your partner’s income if you’re budgeting together
- Side hustle income
- Interest income from a high-yield savings account
In the sample budget, the total estimated income comes to $9,555.
You can also customize the spreadsheet by adding rows or editing formulas if needed.
Creating Your Expenses Budget
After entering your estimated income, move down to the Expenses Budget section and estimate what categories you’re going to spend money in.
What has worked best for me is splitting expenses into fixed and variable categories.
Fixed Expenses
Fixed expenses are categories that stay the same from month to month, such as:
- Housing
- Rent or mortgage
- Subscriptions
- Cell phone bill
- Insurance premiums
For expenses like car insurance that are paid upfront every six months, divide the premium by six to get a monthly amount and enter that figure into the budget.
Variable Expenses
Variable expenses include categories such as:
- Groceries
- Miscellaneous expenses
- Travel
- Dining
These are expenses that can go up or down depending on the month.
Using the sample numbers, the spreadsheet calculates total estimated spending at $5,970.
Based on the estimated income and expenses, the spreadsheet shows savings of $3,585 as profit for the month.
I like using the word profit because I prefer to run myself like a business.
That results in a profit margin, or savings rate, of 37.52%.
The Biggest Budgeting Problem
One major problem almost everyone runs into when they start budgeting is that they greatly underestimate how much they’re spending in different categories.
As a result, they also overestimate how much they’re saving.
Estimating income is often easier because income tends to be more consistent than expenses, especially if you have a fixed salary or hourly rate.
That’s where the other half of the spreadsheet comes in.
Tracking Actual Income and Expenses
As the month goes on, enter your actual income as paychecks and deposits hit your account.
At the same time, track your actual expenses as you pay for things using:
- Credit cards
- Debit cards
- Cash
- Bank transfers
The spreadsheet automatically totals transactions within each category.
If you’re equal to or under budget, the category remains green.
If you go over budget, the category turns red.
This creates a visual indicator showing exactly where you’re overspending.
That feedback helps you determine:
- Whether you have a spending problem
- Where the spending problem is occurring
- Whether your spending is under control and the issue is income
For many people, it may be a combination of all three.
Build a Financial Baseline First
My recommendation is to use this budgeting template for three months while making zero changes to your spending habits.
The goal is to establish an average monthly financial baseline.
One of the hardest things about budgeting is consistency.
If you’re trying to:
- Be consistent with budgeting
- Cut spending
- Increase income
all at the same time, you’re more likely to fail at all three.
Instead, focus on being consistent with budgeting for three months first.
After that, you can begin addressing the other areas.
How to Enter Expenses
Start by reviewing your bank account, credit card accounts, or whichever payment methods you use most often.
Enter:
- The name of the expense
- The vendor
- The category
- The amount
For example:
- Expense: Groceries
- Vendor: Trader Joe’s
- Category: Groceries
- Amount: $100
The spreadsheet automatically applies that amount to the appropriate category budget.
You can also track:
- Date
- Payment method
For payment methods, the spreadsheet includes a dropdown list with credit cards and other payment options such as:
- Venmo
- Cash
- Bank transfer
Additional fields calculate:
- Points earned
- Baseline value of points
- Baseline return on spend
Those features are optional and mainly useful if you like tracking credit card rewards.
The main focus should be the budgeting numbers themselves.
Understanding Overspending
Suppose you set a travel budget of $350 for the month.
If you purchase a flight ticket for $400 and categorize it under travel, the spreadsheet will immediately show that you’ve exceeded your budget.
The category turns red, making it easy to see where the overage occurred.
Why Manual Tracking Matters
Manually tracking expenses can feel time-consuming, especially when there are apps that automate the process.
The benefit of manual budgeting is that it forces you to actively relive the reality of your spending habits instead of passively monitoring them.
That can be very powerful.
Budgeting apps can still be helpful for saving time and organizing accounts in one place.
However, every week or at least every other week, track your income and expenses consistently for three months.
After that, you’ll have a much more accurate picture of your monthly cash flow, and budgeting will likely feel more like a habit.
Adjusting Your Budget
Once you’ve established your baseline, begin adjusting your budget to reflect what you’re actually spending.
Then start removing waste from your budget with minimal effort by cutting unnecessary spending that won’t affect your life too much.
If you still need to increase your savings rate, focus on larger expenses that may have a bigger impact.
Examples include:
- High car payments
- Rent or mortgage costs that are too expensive
- Other significant monthly expenses
Keep in mind that reducing these expenses can require lifestyle changes, which can be difficult.
Trading in a car, getting a roommate, or moving to a different area may not be ideal, but they could help increase your savings.
You simply have to weigh the trade-offs.
The Reality of Increasing Your Savings Rate
There is a limit to how much you can reduce expenses because there will always be a cost of living.
Your expenses will never be zero.
Increasing income, however, is unlimited.
Once you’ve budgeted consistently, understand where your money is going, and lowered expenses as much as possible while remaining comfortable, increasing your income becomes the primary way to improve your savings rate.
That realization led me to start a YouTube channel in 2021.
At the time, I was earning somewhere between $60,000 and $70,000 per year at my job.
I had moved in with my girlfriend, who is now my wife.
Our expenses were very low. We lived in a simple one-bedroom apartment and didn’t spend much.
Our savings rate was around 20% to 30% of our income.
One reason I started creating content was because I saw it as a side hustle that could potentially generate a few hundred dollars per month.
Since I couldn’t meaningfully reduce expenses any further and couldn’t expect a promotion anytime soon, I shifted my focus from spending less to earning more.
I know that sounds simple, but it really does come down to that.
I also recognize that my situation was easier than many others because I had no kids, no mortgage, and very little debt.
The goal of this budgeting template is simply to help you become more aware of your own financial situation.
Maybe you can reduce spending.
Maybe you need to switch careers.
Maybe you need to move somewhere else.
None of those things are necessarily easy.
Easy is relative.
My easy is not your easy, and your easy is not someone else’s easy.
Instead of comparing your finances to other people, focus on your own path and use tools like this budgeting template to understand what your next move should be.
Too many people look at going from saving $0 per month to $2,000 per month and see it as impossible.
In reality, the goal isn’t to make that jump all at once.
The goal is to go from:
- $0 to $50
- $50 to $100
and continue building from there.
Final Thoughts
The budgeting template includes a budget for every month of the year and can be copied for future years as well.
It also comes with a net worth tracker that can be used alongside the budget to monitor wealth growth over time.
Personally, my wife and I update our budget every weekend and update our net worth tracker once per month.
Looking back at where our finances were compared to where they are today has been incredibly rewarding.
As your savings rate increases, it’s important to make sure your savings are earning money for you while you decide what to do next.