Budgeting is something that I never really did until I graduated college. Before, I would save when I needed to save, and spend when I had a little extra. But what I didn’t think about was how much money I’ve spent on things I don’t need, and not enough on things that matter ~ like my 401k. To reach your goals, and sometimes dreams, you may have to be good with your money. This is why I learned how to create a budget that works for me and my lifestyle.
I wanted to share my budget with you. No matter how much you make, you should always be in-tune with your finances. Are you spending more than you’re making? Are you able to start up a side hustle to live your dream life? Here’s a step-by-step guide to creating the right budget for you!
Step 1: Analyze your financial values
First things first, what are your financial goals? Are you wanting to save more for a new apartment? Are you wanting to grow your 401k? Or, are you afraid that you may be spending more than you’re earning?
Find the root cause or interest in researching more about your budget and how money could impact your future. For instance, these last few months I was saving for my new apartment, but this month I’m spending more on items to fill my apartment.
Step 2: Track your spending
Next is to track your spending. If you already do this, congrats! Do you know where you may need to cut down or increase spending in different areas? For instance, you may be spending too much on coffee, but not enough on your savings contributions.
If you don’t know what you’re spending each month, it’s time to learn! Every Sunday, I like to sit down and have a money meeting with myself. I will track my banking apps to see how much I spent on what through the week. Once I tally my expenses, I brainstorm ways I could improve the next week.
Step 3: Make a list of necessary expenses
Along with tracking your spending, keep a running list of your monthly necessary expenses. These expenses may be rent, utilities, wifi, and groceries. Personally, I use a Google Sheet that lists out how much I expect to spend over the month vs how much I do spend. In the same spreadsheet, I have a tab that keeps track of my monthly expenses and they’re due dates.
This allows me to have a one-stop-shop for all my bills. Especially when gearing up to move, this made keeping track of bills a little easier. I was able to ensure I was paying both apartments’ bills throughout the awkward transitional period.
Step 4: Create a spreadsheet that has it all
As I mentioned above, I have a Google Sheets that has everything in it. From my debt payoff plan, savings growth plan, monthly expenses/bills, and my monthly expenses. This allows me to visualize and track my money goals.
This tool makes it extra easy to track when out and about. I downloaded the Google Sheets app to update whenever I’m out shopping and need a pulse on my budget.
Step 5: Compare your wants, needs, and budget
This is the hard part. Pinpoint areas you may be able to cut down, cut out, or add to your budget. For instance, I have a HUGE coffee addiction. I will easily spend ~ $40 in a single weekend on coffee. Even though this is a big-budget steeler, I just work towards cutting it down.
For instance, instead of getting a million different coffees throughout the week, I treat myself to two coffees on a weekend (for a good reason). A good reason may be to hang out with friends (vs getting a full meal out) or treating myself for working 20+ side hustle hours on the weekends.
Step 6: Cut (or add) what you need to
As I mentioned, coffee is my biggest budget-steeler. I LOVE to buy takeout coffee. But instead of getting coffees throughout the week, I make myself earn it. Normally, I will meet up with friends to catch up over coffee on Saturday’s or Sunday’s. To “earn” my coffee, I will show up an hour early to work, and stay 2+ hours afterward to work as well.
Now, if you have goals to grow your savings or 401k, you may need to add more expenses to your budget. Instead of worrying about contributing to your savings each month, set up automatic payments. By all means, really figure out a budget and savings plan that works for you first.
Step 7: Automate what you can (+ don’t forget about it)
When you have a payment scheduled, you’re most likely going to take it seriously. To keep my savings contributions up to par, I set up automatic payments. I have them set to come out on the 11th of every month at a set amount. When I have automatic payments coming out, I feel as if it were paying my credit card ~ I would never miss a payment.
If you’re the same way, you may consider doing this as well. Keep in mind, you most likely are able to set up other automatic payments. For instance, your credit card bills, electricity, wifi, and 401k contributions.
Step 7: Create mini-goals and budget boundaries
To keep yourself motivated, set goals and boundaries. A while back, I tracked my weekly grocery shopping statements. I found that I was spending more than $100 each week for no reason. I would go to Whole Foods, Trader Joe’s, and order takeout on busy work from home days. Yet, this was entirely unneeded.
To avoid this, I tried out grocery shopping once a month at Costco. I’m a really bland eater, so this really didn’t bother me. I only spent ~$220 at Costco and ~$70 at Whole Foods (for supplements). Plus, I have so much food. This trip may have easily lasted me 1.5-2 months. Even though this goal/boundary may not work for you, something similar may!
Step 8: Try out budgeting challenges
You could take things a step further and challenge yourself to a no-spend month. Recently, I did a no-spend month for myself. While I tried this a few times and have yet to pass with flying colors, it’s still a great exercise to analyze my budget. When I know I’m about to break my no-spend challenge, I am aware, and learn from it.
Personally, I’ve only tried a no-spend month (a few times). While these last few times haven’t been super successful, I am excited to hopefully start again. If you don’t think you can do a full month of no spending, try out a no-spend day, week, or bi-weekly. You may be pleasantly surprised!
Additional tools I like to use:
Now, there are a few tools that make budgeting a little easier. Luckily, these tools are free to use and smartphone friendly. Keep reading to see the main three tools I love for budgeting:
Google Sheets (desktop + app)
This is a lifesaver. I created a budgeting template on Google Sheets that I stick to every month. You can create your own by watching this budgeting Youtube video, or tailoring yours however you choose. I’m hoping to release my own budgeting template for purchase sooner rather than later, so stay tuned for that!
Mint budgeting app
I also like to use Mint. They’re a budgeting app that really helps you stay on track with your goals. I haven’t been using this as much recently because I’ve neglected to update my financial goals. But, when I do have them updated, this is an amazing tracking tool. Mint also sends over weekly reports for you to analyze and ensure you’re on track with your financial goals.
Credit card/banking apps
Additional helpful tools are banking apps. Right now, I bank at a few different banks and like to see my balances when on the fly. If anything were to happen, I would easily be able to figure it out as long as I have cell service. I also get notifications for purchases that have gone through and any other urgent notifications if the worst were to happen.
While budgeting isn’t always a “sexy” topic, I like to talk about it. The more you talk about it, the better you may get at it (at least from my perspective). I hope you guys learned a little, or a lot, from this post. Be sure to check in every so often if you want to purchase my budgeting template that I’m hoping will release in 2021!