How to Build a Budget
Take control of your money with a simple plan.
Take Control of Your Money
The key to a good budget is simple: spend less money than you make. A budget is one of the best tools you can use to take control of your financial situation. Most people let money control their decisions because they have never made a clear plan for how to use it. A budget puts you the boss of your money and tells it where to go.
The steps for making a budget are simple. The hard part is changing your behavior and actually sticking to it. I’m guessing you found this website because you are tired of living paycheck to paycheck and drowning in debt. The good news is that there is hope.
Grab a piece of paper and pencil or open a spreadsheet on your computer and follow the steps below. It may also help to print out your recent bank statements and grab a cup of coffee. Let’s get started.
List Your Income
You need to know how much money is coming in each month, so start by listing all of your household income. If you are married, include both incomes because you are doing this together. If your income is not the same every month, just use an average for now.
In future months, you can also include any special one-time income you receive from selling things or other sources. But for this first budget, we are only looking at regular monthly income.
| Income Source | Amount |
|---|---|
| Husband's Monthly Salary | 25,000 |
| Wife's Monthly Salary | 20,000 |
| Side Job Income | 5,000 |
| Total Income | ฿50,000 |
List Your Expenses
Now it’s time to be the boss and tell your money where it’s going by listing your expenses. The first budget you make will take some effort, but it will get easier each month.
Go through your bank statements and add up how much you spent in each category last month. List all of your monthly debt payments and include any monthly savings you plan to set aside. Savings are not really an expense, but we are treating them like one because that money is being moved to a separate bank account.
Your list of expenses might look something like the example below. Are you surprised? You may be shocked by how much you spent in some categories. That is good. You need to see the problem before you can fix it.
| Expense | Amount |
|---|---|
| Food | 5,000 |
| Rent or Mortgage Payment | 10,000 |
| Electricity | 1,500 |
| Water | 300 |
| Phone | 700 |
| Internet | 500 |
| Emergency Fund | 2,000 |
| Songthaew fares | 800 |
| Gas for car or motorcycle | 1,200 |
| Household Supplies | 3,000 |
| Car Loan | 12,000 |
| Credit Card Payment | 5,000 |
| School Loan | 2,000 |
| Total Expenses | ฿45,000 |
Income − Expenses = Zero
The goal is to give every baht of income a job so that you have zero baht left over at the bottom of your budget. Every baht must have a purpose. Will this ever work out perfectly at the end of the month? Probably not, but you should try to get as close as possible. In our sample, there is ฿5,000 left to assign.
If income minus expenses equals a positive number, that is great, but give the remaining balance a purpose. If you are paying off debt using the debt snowball, put all of that extra money toward the debt you are currently focused on paying off.
If income minus expenses equals a negative number, you need to find a way to reduce expenses, increase your income, or probably both. As long as that number stays negative, you will keep digging a deeper financial hole.
Ask Hard Questions
Now that you have done the math, it is time to ask yourself some hard questions. Remember, if you do not change the behavior that got you into this financial mess, you will not be able to get out of it. Look at your list of expenses and find places where you can cut back. Go through every category carefully, one at a time.
- Why do I order 90฿ kaprow on Grab when I could cook it for 30฿ at home?
- Am I paying for subscriptions that I don't need right now? Netflix?
- Why do I let food go bad in the fridge instead of planning meals better?
- Why am I spending 120฿ on an airconditioned taxi when I could take a 10฿ yellow songthaew?
- Should I sell my car and buy a cheaper one?
- I spent that much on doing my nails?!?!
- Why do I buy overpriced eggs at 7-11 when I could buy them cheaper at Makro?
- How much gas would I save if I used the motorcycle instead of the car?
- Do I need internet at home when it's free at work? Can I share with a neighbor?
- Why do I go to the market or store without a list and end up buying extra things?
- Why do I spend 100฿ at the new auto car wash when I could do it myself in 30 minutes at home?
- Why do I buy brand-name items when the cheaper version would work fine?
Track, Adjust, and Continue
Your budget is ready to use. If you need help, check out our downloads page and use our budget tracker worksheet. One column shows your planned budget, and another shows what you are actually spending. Track your expenses carefully and update that column weekly or even daily so you can see how you are doing.
This budget belongs to you. You are the boss of your money, so adjust it as needed. If you realize that ฿3,000 will not be enough for food each month, change the number and try again next month. A budget is almost never perfect, but it will guide your spending.
Over time, you will become much better at estimating how much money you need each month for each expense category. At the end of every month, sit down and make sure your budget is ready for the new month. If you are married, do it together. A budget needs to become a habit. Set daily, weekly, and monthly reminders to review or update it. This will not feel hard forever. Eventually, living frugally, watching your spending, and staying out of debt will become second nature.
Tools That Help
💰 The Cash Envelope System
One optional way to manage your expenses is to use cash envelopes. If you plan to spend ฿2,000 on food, put ฿2,000 in an envelope and only buy food with that cash. Your friends might make fun of you, but they are probably broke. Studies have shown that people often spend less when they use cash. When the envelope is empty, you stop spending in that category or move money from another envelope. Some people even carry multiple envelopes of cash, with each envelope assigned to a different expense category.
🌙 The "Next Day" Rule
If you really want to buy something that is not necessary, wait until the next morning before deciding whether to buy it. This is a helpful rule for many decisions in life. We often make better decisions after sleep because it helps us reset and think more clearly. We usually have more self-control and better judgment in the morning. It may sound a little silly, but you may be surprised how often you decide the next day that you did not really need what you wanted the night before.
📅 The Sunday Evening Check Up
Make it a habit to review and update your budget every Sunday evening, or at another scheduled time each week. Print your bank statement and use it to update your numbers. If you added notes to your transfers, those notes should appear on the statement and help you track your spending.
🏦 Multiple Bank Accounts
Open multiple bank accounts and give them nicknames in your banking app so you remember their purpose. As soon as you get paid, transfer money into those accounts based on your budget. For example, if you are saving ฿2,000 per month for your emergency fund, transfer ฿2,000 to that account and update your budget.
You might have separate accounts for food, savings, health, vehicles, education, and other categories. It’s like using digital envelopes, and it helps keep money for future needs out of your main spending account. When you transfer money between accounts, add a note in the transfer description so you remember why you moved it.
I recommend having at least three bank accounts: a household account for general spending, an emergency fund, and a sinking fund (see the next section below). Kasikorn has one of the best banking apps in Thailand and includes digital envelopes and a built-in budget feature.
Sinking Fund
Most of the expenses on your budget are monthly, like rent and utilities. A sinking fund is a way to prepare for expenses that do not happen every month. Instead of being surprised by a car insurance bill you forgot about, you plan ahead and save a little at a time. This is usually tracked on a separate sheet of paper or spreadsheet. You can download a Sinking Fund Worksheet on our downloads page.
In the sample below, this person has identified six expenses to prepare for. On the main budget, they would simply add one expense category called ‘Sinking Fund’ and transfer ฿6,800 to that account each month.
| Saving For | Save By | Amount Needed | ÷ Months | Monthly Budget |
|---|---|---|---|---|
| Car Insurance | Mar ’27 | ฿9,600 | 12 | ฿800 |
| Home Repairs | Mar ’27 | ฿12,000 | 12 | ฿1,000 |
| School Tuition | Nov ’26 | ฿8,000 | 8 | ฿1,000 |
| Christmas Gifts | Dec ’26 | ฿9,000 | 9 | ฿1,000 |
| Vacation / Travel | Jun ’26 | ฿6,000 | 3 | ฿2,000 |
| Birthday Gift | Dec ’26 | ฿9,000 | 9 | ฿1,000 |
| Total | ฿6,800 |