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Whether you’re in debt or debt free, have $5 or $5 million dollars, you should know exactly where every dollar of your hard earned money is going. If you really want to thrive and not just survive, “B*tch better have a budget.”

Think of it this way, managing your personal finances is a lot like running a business. You are responsible for all aspects of “You Inc.” Paying close attention to your balance sheet (your budget), plays a critical role in running You Inc. efficiently. You must pay close attention to where every dollar is going to ensure your business is profitable (your household has a positive net worth, your family isn’t struggling to pay bills, you aren’t living paycheck to paycheck, etc). That’s why having a balance sheet (a budget) is an essential part of running your business!

A budget or a spending plan, is an effective tool that, contrary to popular belief, will actually provide you with more financial freedom because it gives you structure. I can honestly say that if I wasn’t as meticulous as I am with budgeting, I wouldn’t have been able to pay off over $38k in debt in less than 18 months! A written budget gave me the structure I needed to pay $hit off which, in return, has given me more freedom to focus on the things that really matter like building wealth and saving for retirement.

Creating an effective budget/spending plan doesn’t happen over night and requires constant fine tuning. Once I finally had a budget in place, it took weeks and weeks of tweaking to finally get to the state that it is in now. There also isn’t a one size fits all approach that you can google because we all have varying levels of income, pay dates and bills, so figuring out what works best for you is critical.

I am a big fan of Dave Ramsey’s “Zero Dollar Budget” approach. This method of budgeting requires that you allocate every dollar of your take home income to a budget category until you have zero dollars left to allocate. That way you know exactly where each and every dollar for the month is going.

Here is my step-by-step guide on how I do my own zero dollar budget each month –

1.) A few days before the new month begins I grab a pen, paper, and open up my excel budgeting spreadsheet (Click here to download my FREE Excel Version Budget Spreadsheet) or download a FREE PDF sheet below. Personally, I prefer to use excel because it’s quicker and easier to use. I’ve built formulas that calculate everything for me so I don’t have to waste time double checking my numbers.

Free Budget Sheet

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Make Real Cents Free Budget Sheet- Download as many times as you want!

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2.) I create a copy of the month before and save a new “month” worksheet, in a different excel tab and I tweak the numbers from there. I populate the spreadsheet with all the new numbers and information for the month (see downloadable excel budget sheet examples). My pay cycle is bi-weekly, so I budget for two weeks at a time.

Tip: Try not to create a budget based on approximations, if you can, figure out the EXACT amount for each bill, expense, etc. and the EXACT amount of take home pay you will have for the coming month.

For your budget categories, ensure you list EVERYTHING you regularly spend money on during the month. For example, If you spend money on random things here and there that you anticipate but these things may not be consistent each month, write down a category for Misc./Free Spend money. If you want to cut back on buying lunch at work, breakout your generic food category into specific breakfast/lunch and dinner categories. Each category will have its own line item on the spreadsheet, this will allow you to allocate a very specific amount to each food category based on your goal (lowering the amount of money you spend on eating out/buying food at work) rather than lumping it all into one big food category that won’t allow you to track your specific goal.

Tip: If you are trying to pay down debt (read more about how to start), after tweaking your budget a few times, focus on the areas of your debt that you may be able to squeeze a few extra bucks from. Even if it’s just a few extra dollars, anything over the minimum monthly payment, will help you pay your debt down faster. For example, my budget included cable (read more about it), I knew that it was getting too high as a monthly luxury expense and knew that money could be better utilized, so my fiancé and I cut the cable.

3.) I do an all cash budget, which means that I pull out cash for every category in my budget except for the large items like rent, car Insurance etc. I will still allocate money to these bills on my budgeting sheet however, once I get paid, I immediately go into my account and pay for these larger items online or leave the cash in my account for the items on auto-pay. Whatever categories are remaining e.g. money for food, gym membership payment, etc. I pull out cash for.

For the above example, I would pay my larger bills online, as noted, and will pull out cash for the items marked on my budgeting sheet as “cash”. The best thing about a cash budget is that I rarely use my debit card. If I don’t have the cash for it at the time of purchase then to me that means one of two things 1.) it wasn’t in my budget and/or 2.)I am all out of spending money for that particular category.

Tip: It’s never safe to carry around a wallet filled with a bunch of cash, so prepare for the day. When I wake up, I pull money out of the categories I know I will probably use that day. I also always allocate money to my miscellaneous category for impromptu things that may randomly come up.

4.) The most effective way to pull out cash that aligns with your budgeting figures is to calculate how much (the count) of each bill denomination you will need. I usually do this in excel via a calculated spreadsheet I’ve put together. It looks something like this:

5.) Once I figure out the count of each denomination, I put together a little sheet like the below, to hand to the bank teller based on my bill denomination breakdown (example above). I hand the teller the paper and say I will need a specific count of each denomination, broken down by what is listed on the paper. For example, based on the below chart, the teller will give me 14 $1 dollar bills, 4 $5 dollar bills, etc.

6.) I take the money home and file it away in a small accordion file folder, separating the money out for each category with the specific denominations that I calculated earlier.

Tip: If you do a cash budget, it may be wise to look into purchasing a fire proof or cash lock box like the below. God forbid something happen and you are left with just ashes and no cash.

Check it out on Amazon

7.) I fill my wallet with a little of each category, as needed. For instance, If I know I may possibly need gas or will want to buy snacks at work, I will take money out of the accordion file for each of those specific categories.

After I fill up my wallet, my budget is all set for the next two weeks. I will revisit my accordion file when needed and will be mindful of the remaining amount of money in each category.

I know all of this may seem like a lot but once you get into the swing of things, it’s pretty easy. I usually complete my new budget within 15 minutes, minus going the time it takes to go to the bank. It’s a good habit to cultivate and ritual to incorporate into your life, the art of spending time with your money. Consistently going over your finances, your budget, and engaging in money conversations, will help keep you focused on your financial goals.

If you want to be a millionaire, then you have to cultivate millionaire habits, and according to the book “The Millionaire Next Door”, millionaires budget just as much as the next person so a B*tch better have a budget. Commit to creating a budget every month this coming year! You will be surprised by how much more money you can actually save or use to pay down debt, once you are paying attention to where it’s all going.


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Written by Carmen

Creator of, a blog dedicated to all things personal finance and money. Crushed over 38k in debt in less than 18 months and I’m on a mission to help others achieve financial freedom.