learning how to budget

how to budget

starting simple.

When I first began budgeting I started as simple as possible. I did not want to become overwhelmed or wind up confusing myself. So, to start off, I made two columns. One column had my expenses while the other had my income. I began gathering my bills and writing down what they were. Expenses include anything you must pay for each month and income includes anything you earn each month. See the examples below of how to budget for expenses and income.

expenses:

  • Mortgage or rent.
  • Car payments.
  • Insurance (car, dental, health, home, renters, and vision).
  • Utilities (electricity, garbage, gas, sewer, and water).
  • Cable and internet.
  • Cellphone.
  • Credit card payments.
  • Student loans.
  • Entertainment (Netflix, Hulu, etc).

how to budget:

Once I listed all of my expenses and sources of income, I started filling in approximate costs. Some expenses are the same each month. For example, car and mortgage or rent payments. Other expenses will fluctuate throughout the year such as the electricity or water bill. For the fluctuating bills, choose the higher costs so that you are over-prepared.

After you have each column filled out to the best of your knowledge, subtract the expenses from the income. This is where you hope that your result is a positive number! If it isn’t, you need to rethink your expenses. This number will signify excess money that you can put towards things such as gas, groceries, and savings. Or you can use this money to get your hair done or treat yourself to something. It is absolutely up to you! However, I will suggest you put as much as possible in a savings account.

emergency funds:

An emergency fund is exactly what it sounds like: a fund for emergencies. This savings account should have a minimum of three months’ worth of expenses saved up. If something were to happen (you are unable to work or lose your job), you need to be prepared. Please remember, an emergency fund is separate than your regular savings account.

what is your favorite “how to budget” suggestion?

Don’t forget to check out my post about becoming frugal!

  • Rachel Ritlop

    so helpful! i always start with stacking an emergency fund and laying out non-negotiables

    • Oh absolutely! An emergency fund is so incredibly important. Life has a funny way of throwing surprises and having that makes the biggest difference.

  • This is very a very helpful list for those starting out. It is so important to not get overwhelmed. Love your tips on budgeting.

    • Thank you so much! Finances and anything with money can be so overwhelming. Especially when it comes to bills and what if’s.