Living Paycheck To Paycheck? Here's Your 4-Step Guide From Financial Guru Dave Ramsey On How To Make A Budget

Have you ever caught yourself scratching your head, wondering where all your hard-earned money vanished by month’s end? You’re certainly not alone. A survey conducted by Payroll.org in 2023 tells us that 78% of Americans live paycheck to paycheck. This suggests that more than a third of the U.S. population struggles to save after clearing their monthly bills.

While drafting up a budget might strike you as a dreary task, it’s simpler than you might imagine and the payoff is well worth the elbow grease. Here are four broad steps listed by personal finance guru and the founder of Ramsey Solutions, Dave Ramsey on how to make a budget.

Step One: Pin Down Your Total Income for the Next Month

Kickstart your budget by scribbling down your expected total income for the coming month. This should cover everything from your regular salary to any freelance gigs and side hustles you’ve got going on. Accuracy is key here — knowing the exact amount of cash you’ll have at your disposal is the base of a foolproof budget.

Step Two: Catalog Every Single Expense

Here comes the bit that might sting a bit — time to tally up all your expenses. Cast a wide net here: fixed costs like rent and car payments, variable splurges such as groceries, nights out, and even those cheeky little purchases like your daily morning coffee. Yep, even the small stuff counts because it all adds up!

Step Three: Balance the Books to Zero

Once you’ve laid out all your financial cards — your income and outgoings — it’s time to crunch some numbers. Subtract your total expenses from your income. You're aiming for zero at the finish line. This zero-based budgeting approach ensures every single dollar is diligently doing its job, either bulking up your savings or covering an expense.

Step Four: Keep Tabs on Your Spends

As the month unfolds, keep an eye on every expense. Whether you're a fan of digital apps, sprawling spreadsheets, or just old-school pen and paper, tracking your spending helps you stick to your budget and tweak things on the fly, if needed. The end game? No nasty financial shocks as the month wraps up.