Hey guys. Welcome to EveryDollar. My name is Rachel Cruze, and I am a Ramsey personality and I’ve been teaching people how to budget for years. To be honest, I used to hate it. Yes, seriously. But I knew it was important and now it’s like second nature. So, listen, no matter how you feel about budgeting right now, don’t worry. We’re going to walk through this together.

Before we start, open up your online bank account or grab your bank statements. This will help you figure out all the numbers you need to fill in as we go. And open up EveryDollar on your phone or computer (you can pause this video until you get all that ready). Okay, let’s dive in and set up your first budget in three steps.

Budget step one. “Enter your income.” Income is any money you plan to get during that month. That means your normal paychecks and any extra money you have coming in through a side hustle, garage sales, freelance work or anything like that.

Here’s how to enter your income in EveryDollar. First, click “Add income.” Then second, label the income. So you can call this “Paycheck 1,” or use your employer’s name, whatever works for you. Third, click the planned amount and add how much that check will be if you’ve got an irregular income. Then, just put the lowest estimate of what you normally would make in the spots so you can adjust it later, if you need to. But for right now, just do that. Finally, repeat this process for any other money you have coming in and for your spouse, if you’re married. And that’s it. Nice work, you guys.

All right, let’s move on to the next step — budget step two, “List your expenses.” Now that you’ve planned for the money coming in, you can plan for the money going out.

So it’s time to list your expenses. The first budget category you’ll see is “Giving.” So we always recommend — no matter where you are financially — to give at least 10% of your income. Next, start covering your four walls. So, this is going to be food, utilities, shelter and transportation. When you look in EveryDollar, you’ll see these three budget categories. You’ll see “Housing,” “Transportation” and “Food.” Then under each of those, you can add budget line items by clicking “Add item” and naming the line. So, for example, under “Housing,” you can type “rent” or “mortgage” as a new budget line. Then type how much you’re going to pay each month for that planned amount. Then, you can look at your utility bills.

So, this is a great time to go back to your bank account or your statements and go down and you can add them one by one, things like electricity and water. Then under the food category, you’re going to see “Add item” so you can type “Groceries.” Now this category changes a lot, so just make a good estimate of what you think you’re going to need for the month ahead. And you keep going until you’ve covered your four walls.

Next, list other monthly expenses. So, we’re talking about clothing, insurance, debt, savings, entertainment, personal spending — all of that. So, in EveryDollar, you’re going to see these categories again. Under each of those, you can make budget line items for what you need.

Okay, it’s time for the last step.

Budget step three is “Subtract expenses from income.”

And guess what, you guys — EveryDollar does this step for you as you go. Oh yeah, it’s amazing. If you’ve got money left, [after] you’ve subtracted all your expenses, don’t just leave it there. You’ll end up just spending that amount of money on coffees or those one-click deals that you see. So, trust me, anything extra you have, let it go towards your money goals, like saving or paying off debts.

But what if you end up with a negative number? Yeah, not good, but that’s okay. So, what you have to do is cut your expenses until your income minus your expenses equals zero. I’ll give you a little hint. I would start with the restaurant or entertainment categories. Yeah, I know it kind of hurts. Pizza is my love language, but listen, you can cut some of that out to make sure that your budget equals zero. So, once you hit zero, then these words will pop up at the top of your screen, “It’s an EveryDollar budget.”

Oh, and when you see this, just celebrate. If I was with you, I’d give you a high five. But I’m not. That’s okay because honestly, this is a huge deal. You just set up your first budget. Now, it is important to track all of your expenses all month long and to make a new budget every single month. But we can talk about that later. Right now, I just want to congratulate you for setting up your first EveryDollar budget. This is the foundation of personal finance and such an important habit to get you big results with your money.