Budgeting: What It Really Is and How to Start Doing It

Budgeting may seem like it’s a difficult, time consuming thing that can only be done by people who have their lives together. Well, I’m here to tell you that the idea that budgeting is only for some people is harshly incorrect.

Before we get into the nitty gritty, let’s take a look at what budgeting is:

Budgeting is really just a personalized plan that allots resources to areas that need those resources. You can budget many things, but in this article we’re going to focus on money.

While budgeting may seem like it is complex, difficult, time consuming, or energy draining, it is meant to be the total opposite of all of these things- it is meant to be simple, easy, efficient, and freeing.

How do I get started?

Obviously, you’re here for a reason- you want to know how to get your financial life together, and you’ve decided that budgeting may be a good place for you to start. Well, let’s start with making a budget. It should look a little something like this:

1. Calculate your income. Figure out your net income- that is, everything you actually get to keep at the end of the day. We don’t want to do this based off of your gross salary (what you make before deductions like taxes) because we want to be able to see what we’re actually working with.
2. Calculate your fixed expenses. These are things like your rent/mortgage, phone bill, insurance bill, and any other bills or pre-set contributions (like putting x amount into your retirement account every paycheck.) These are things that do not vary.
3. Now, subtract your fixed expenses from your net income. This will give you the amount you are able to spend after your for-sure set-in-stone expenses are covered. This is not your “fun money”… we’ll get there soon, though! Hang in there!
4. Roughly estimate your variable expenses. Variable expenses are expenses that can change from one pay period to the next. These can include things like groceries, gas, craft or hobby materials, pet costs, childcare costs, and whatever else is a priority in your life that you spend money on. This is meant to be a rough estimate, and it’s a good idea to budget just a little bit more than you think you may need. Having cushion room within your variable expenses is important… life happens, so it’s good to be prepared!
5. Savings Savings Savings! After you subtract your fixed and variable expenses, you can allot some of your money to savings. You can make this fancy and create sinking funds, or keep it simple and contribute a certain percentage to your savings.
6. Now… time for the fun money! After you’ve covered all of your expenses and even set aside some into savings, you’re left with a little chunk of change that is for whatever you want to spend it on!

And… It’s easy as that! If you’re interested in more specific budgeting tips and methods, stick around for more!