A Beginner’s Guide to Budgeting

Do money and budgeting feel difficult to navigate? 

Have you ever been afraid to open your bank account? 

If you have asked yourself either of the above questions, then this blog is for you. 

For literal decades, “money talk” has been frowned upon and it is time for a reality check: NOT talking about money is damaging. 

Not talking about money means not learning how to budget. 

Not talking about money means not learning how to invest. 

Budgeting and investing are critical elements to an individual's financial health, so, let's talk money. 

A beginners Guide to Budgeting

  1. What is Your Income? 

We're diving right in — before budgeting can be created, “true income” must be explored. “True income” means how much you take home after taxes – what amount hits your bank account? What is your primary source of income and how much do you make? Do you have a side hustle? Do you work somewhere part time? Spend a few moments listing out your income sources and add them up. This number, whatever it may be, is how much you bring in each month. 

 2.  List out fixed expenses

To get a clear picture of your financial health, list out your fixed expenses. Fixed expenses are things like mortgage payments, car payments, subscriptions, and so forth. These line items are routine expenses and do not fluctuate in cost. 

 Before we go further, I want to share something: the secret sauce to budgeting is making it sustainable. This extends beyond your spending – sustainable budgeting includes doing what works for you from an organizational standpoint, too. I’ll share what I do throughout this article, but don’t feel obligated to follow my structure to a tee. Do what makes sense, feels natural, and will be sustainable. 

I’m a visual person, so I keep my fixed and variable expenses in separate columns. It helps me see what is in each category, but if one column works for you, then keep them all in one. 

  1. List out variable expenses

Variable expenses are things you pay for monthly that fluctuate in cost. For example, groceries, electricity, gas (I’m looking at you, inflation) and personal spending will vary each month.

  1. List out negative consumer debts (credit cards, student loans)

Next, list out your negative consumer debts. Negative consumer debts are liabilities (items that you own that do not increase in value over time). Two examples of consumer debt are credit cards and car loans. The monthly cost of these items will already appear in your fixed expenses column, but the goal here is to get an understanding of how much total consumer debt you have. 

 On your piece of paper or Excel spreadsheet, it may start looking like this:


– W2 Job: $4,000

– Side Hustle: $800

– TOTAL INCOME: $4,800.00


Fixed Expenses

– Rent: $950

– Apple Music: $10

– Hulu: $10

– Discovery Plus: $4.99 

– Cell Phone Bill: $85

– Internet Bill: $50

– Car Payment: $490

– Car Insurance: $92


Variable Expenses

– Groceries: $400

– Gas: $150

– Personal Spending: $75


Consumer Debt

– Car Loan: $28,000

– Student Loans: $20,000


  1. Identify where you want to be

Minimize the Excel sheet, close the notebook, and avert your eyes to something else for a moment. I want to pause here and encourage you to begin visualizing your ideal life. Where do you want to be in one year? Where do you want to be in five years? Allow yourself to fully picture your life at these different points, is there something particular you notice? If so, pay attention to it – whether that’s a general sense of fulfillment or something else, pay attention to what comes up for you. In order to reach these different milestones, are you willing to dedicate yourself to a budget?

This doesn't mean foregoing all the things you love — like I am definitely NOT talking about giving up morning iced coffee (that would simply be a moral violation). I mean becoming a conscious spender and taking control of your budget.

  1. Do the Math (Subtract Fixed & Variable Expenses from income, what's left over?)

Once you've taken a few moments to be real with yourself and dig deep, it's time to see what's left at the end of the month. Add your fixed and variable expenses together, then subtract them from your income. The leftover amount is what you have to save or invest. 

Now, if you believe this number is too small, there’s two choices: increase your income or revisit Step 3, dig deep, and see if you can reduce your variable expenses. You can increase your income through viable side hustles such as freelance projects and Uber. If reducing your variable expenses does not seem sustainable, then consider having a few “No Spend Days”. “No Spend Days” is a fun challenge. Essentially, pick a few days out of the month where you do not spend anything beyond necessities (think: gas and groceries are okay – lunch out would be breaking the rules). I have seen budgeters take on “No Spend Weeks” and “No Spend Months”, so challenge yourself to increase your savings.

  1. 100% of the left over money goes into the $1,000 Emergency Fund

Most financial coaches recommend starting with a $1,000 Emergency Fund and honestly, building a safety net is financially sound. Following this rule, 100% of the left over money goes towards your emergency fund until it reaches $1,000. After you've saved $1,000, it's time for Step 6. 

  1. Focus on Debt Paydown

Our goal here is to pay down as much negative consumer debt as possible. Negative consumer debt refers to things like car payments and credit card debt. Generally speaking, if your money can make more elsewhere, then you can skip this step assuming the following: you’re comfortable with the monthly payment and are not putting yourself in a poor financial position.

For example, if your car note carries a 2.5% interest rate and you can make more than a 2.5% return on investment elsewhere, most financial coaches recommend investing in the opportunity rather than paying down debt. Please take all of this advice with a grain of salt and ultimately, do what feels best for you. If paying off debt will make it easier to sleep at night, then go for it.

  1. Save 3-12 Months Expenses

It is recommended to save a minimum of 3 months’ expenses in the event of emergencies. This advice is sound and I advise you to consider your income. Is your income stable or do you work a commission sales job? If your income is stable (i.e. military), then maybe 3 months of expenses is enough. If your income is unstable or you have a lower risk tolerance, save anywhere between 3-12 months of expenses. Again, to echo the previous point, do what feels the best for you. 

  1. Invest, Invest, Invest

Once you are confident in your savings, it's time to invest! Investing looks different for everyone. Perhaps you invest in the stock market or focus your efforts on real estate — whatever that looks like for you. With a solid financial foundation, you're ready to start achieving those larger goals. 

By being intentional with your budgeting, you will create a solid financial foundation. Are you already following a budget? What helpful tips or tricks have you learned to stick to a budget? 

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