Budgeting 101

piggy bank for budget bible website

Let’s face it: no one wants to be told how to spend their own money. After all, it belongs to you. You worked hard for it. I completely understand.


With that said, not everyone is gifted in healthy money management. What may be a temptation to spend for one person may not be the same for someone else. Two people may have the exact same income, but live two completely different lifestyles. The spending habits of an individual who is single with no children may not be ideal for someone married and has a toddler.


In order to develop a realistic budget that you can abide by, there are a few fundamentals one must first understand.



Here’s a secret: “need” and “want” are NOT synonyms. They’re not even close. Consider the following:


You need food. . .but you want to have dinner at fancy restaurant with your friends.

You need shoes. . .but you want an expensive pair of Adidas/Vans/etc.

You need a home. . .but you want to rent a deluxe, beachside, condo in Miami. 


The key is prioritization: understanding and giving attention to important things first. In the case of finances, necessities are important and come first; the things you need. Don’t get me wrong, a fresh pair of sneakers, a deluxe condo, and a gourmet dinner are all nice things that anyone would want for themselves. But if these aren’t things you can afford or live comfortably without financial strain, they’re not a good choice.


Even if your salary is high enough, there may be a certain number of necessities that your income must tend to first, which can still leave you with less money to spend on the things you want. Which brings us to the next subject.



Your salary or pay stub shows how much money you make each month, but do you know how much of it you have to spend each month? The best thing to do before spending money on extra things is to analyze the amount that must be reserved for expenses. Make a detailed list of all of your bills for the month and add them together for a total. Here’s an example:


  • Rent/mortgage: $800
  • Utilities
    • Electricity: $50
    • Water: $40
    • Cable/Internet: $60
  • Car loan: $280
  • Car insurance: $100
  • Gas: $150
  • Cell Phone: $70
  • Medical Insurance: $150
  • Home/renters insurance: $30
  • Groceries: $250

TOTAL:  $1,980


Now, subtract that total from how much you make each month. Let’s say you make $1,500 each pay period and have two pay periods per month. Your total monthly income would be $3,000.


Subtract your total monthly expenses from your total monthly income: $3,000-$1,980= $1,010


So you have an estimated $1,000 left over to spend per month, which is about $250 per week (considering four weeks in a month). If you’re buying lunch every day during the work week, which is about $10 to $20 per day, five days a week, you’re already spending nearly $100 of the $250 per week on food alone, and that’s not including weekends.   


This is why it’s imperative to pay attention to where your money is going, which takes us to the last principle.



This may sound obvious, but it’s easy to get caught up in the moment and forget how much money you’ve spent. We live in a consumer-driven society where everything we see, from billboards to commercials and even Instagram posts, are convincing us that are lives are miserable without their products and if we don’t buy their products we’ll remain unhappy.

Don’t fall for it.

The only thing that will make you unhappy in this scenario is your debit card getting declined at the register, or finding yourself knee-deep in debt.


The easiest and most effective way (in my opinion), of tracking your spending is writing it down. You can easily use a basic notebook or binder to update every evening and keep your receipts inside for reference. I’ve created a budget tracker that helps me stay organized each month. You can download it, for free, here.


I manually budget and track my finances bi-weekly using my Budget Journal.


There are also helpful apps and online tools available that do the same thing digitally, such as Mint. Whichever works best for you. Personally, I prefer writing things down so that I don’t have to depend on my phone or the internet for everything.

Keep in mind, we didn’t account for other forms of debt, such as a credit card bill or student loans, in the example expense list. Ignoring and not paying off those types of debt can do a load of damage to your credit, which is a big no-no. (You can learn more about the dangers of bad credit in another post.) For now, take advantage of budgeting apps and make a healthy habit of saving receipts. Writing down everything you spend may not be easy at first, but once you get the hang of it, you’ll see it was well worth it.

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