How To Budget For Beginners | Step By Step Guide

How To Budget For Beginners | Step By Step Guide

I’m going to show you exactly what you need to do to start budgeting to eventually become a “rockstar” with your finances.  Today, I’m going to walk you step by step on building your budget.

The first time that you do a budget it can be so stressful.  Where do you start?  What do you do?  And when do you even do it?  Okay, take a deep breath… no seriously take a deep breath.  I used a budget to pay off over $100,000 in debt, I used one to save up 3 months in expenses in less than 6 months,  I still use one every single month and always seem to find extra money every month.

I always hear people say, “I can’t budget  because I actually want to do things”.

A budget is not telling yourself “no.” In reality, a budget is just a tool that helps you say “yes” and not dig a hole for yourself in the process.  It’s about creating more freedom in your life.  It’s about creating a little extra room in your finances for you to make smart decisions with your money.  By doing this you will feel more in control, less stress, more confident, and to find more money that you probably didn’t realize that you had to spend on more things that you want.

Some people say they don’t need a budget, they are just going to focus on making more money.  You should prioritize your spending plan because how will you know how much you will need to make if you are not tracking your spending.  If you just start making more money you are just going to be just a broke.

When you decide to take a trip, you leave with a GPS or some kind of navigation.  If not you will get on the road and go generally in the direction of your destination but you will constantly get lost, constantly stopping to ask for directions, and it will take you longer to reach your destination.

The most important reason to have a budget is that it tells your money where to go every month.  It’s like the money roadmap to help you get from point A to point B in the most efficient and effective way possible.

Most people are afraid to analyze their current position because they’re AFRAID of what they might find.  You need to pause and punch fear in the face. It’s time to stop letting your money control you, it’s time to come up with a plan and begin taking control of your money.

First you want to figure out WHY you want to start budgeting. Your why is giving your budget purpose and will give you fuel to stay motivated.  If your why is to go on that dream vacation, buying a car, saving for a downpayment for a home.

The best time to have started a budget was yesterday, yeah so you already missed out on that time.  So let’s jump on over here and go through to steps of setting up your budget.

First you want to calculate how much money that you have coming in.  This way you will see how much money that you have to work with.  Take some time and list out every source of income.  If you have some sort of side hustle, you would want to include this in this area as well.

If you have an irregular pay, you want to use your base income that you have every month.  Meaning if you know 3,000 is the lowest that you normally get, and use that as your starting point.

Now it’s time to list out your basic monthly expenses.  First you would want to cover the expenses that will cover your basic needs, think of things that you need to survive.  Things that if you don’t have them that your life wouldn’t be able to function properly.

Things like:

Tithes/ Charity

Housing

Groceries

Fuel

Electric 

Water

Trash

Car Insurance

Then after you take care of your needs, it’s time to list what I like to call “gotta haves”

Things like:

Cellphone

Internet

Health Insurance

After you have all of those listed out, you are going to want to add the minimum payments on all of your debts.  I know that’s not ideal but you want to at least keep your head above water on all of your basic debt.

Things like

Credit Card

Car Pay

Student Loans

Next list out all of your optional expenses. This is where you will use your goal to help determine where you will budget the rest of your money.

This could be where you are attacking debt, saving up for a downpayment for a house, taking a nice family vacation, buying that new thing that you have been wanting.  Put that in here.  Don’t be afraid to add things to your budget that you value.

Just because I don’t budget for getting my nails done doesn’t mean that you should.  A budget is not a one size fits all.  Put your own lines in there and prioritize them from most important to least important.

After adding your line items to your budget you will keep deducting from your income and keep an eye on what you have left after adding each expense.  Don’t apologize to people for what you deemed important in your budget.  After listing all of your expenses you want to have a ZERO balance.  You want to make sure that every dollar in your budget is accounted for.  Making sure that all of your expenses are accounted for will help keep you on track and informed.  

Leave a Reply