How to Budget for Beginners

Regardless of what the economy is doing, being in a financial mess is never an easy situation to endure. Having bills and expenses pile up can be daunting and makes maintaining a clear mind almost impossible. No one is 100% rational under huge amounts of stress. However, that situation can be easily fixed in one simple step. Budgeting.

Making a monthly budget was something my husband and I had never done before, and he loathed the idea of even attempting one. "I can keep track of everything in my head; there's no need to waste time with a budget every month," he would say. But as soon as we finished our first few budgets, both of us wished we had started sooner! Why? Because you're able to see exactly how to fix your financial headaches and how to achieve your goals with your money. A budget gives your money a plan and purpose to follow, instead of wondering where it all went at the end of the month.

Budgeting can take a few months to get the hang of, but once you do, you will be unstoppable. We make a new budget on the 1st of every month and have been doing this consistently over the last eight years. Its been the catalyst for all of our financial success - paying off $120,000 in debt in three years, saving over $60,000 in cash, buying a house, investing, and giving.

So, how do you make a budget?

A budget can be written by hand, on an excel spreadsheet, or through an app like EveryDollar or Mint. A budget is simply a written spending plan that includes your monthly income and monthly expenses. It doesn't take long and can be fun with highlighters, colored pens, doodles, etc.

The goal of a budget is to give a purpose to every dollar of your monthly income. So if you make $3,520 per month, all $3,520 should be given a job to do, whether that be paying for ordinary expenses, paying off debt, buying a meal or two at your favorite restaurant, saving, investing, giving to charity, etc. leaving nothing unaccounted for.

We list our expenses in order from most important to least important. For example, food and water are more important than a haircut or gym membership. Likewise, it's important to make sure your basic needs for life are met (in our opinion) before saving, investing or giving. This helps to prioritize your money. Below is an example of a budget we use every month (if you like the layout it is completely free to download here).

Once your basic needs are taken care of financially, you’ll begin to feel a sense of stability that is very powerful in helping you move ahead. Add to that a small emergency fund, and you’ll start to see a light at the end of the tunnel of financial independence and freedom.

We hope this helps spur some ideas for a budget that's right for you to start your financial freedom journey.