If you've ever felt overwhelmed by the idea of managing your money, you’re not alone. The thought of budgeting can seem like a maze of spreadsheets and restrictions, but in reality, it’s a powerful tool that helps you control your finances, build savings, and avoid unnecessary stress. Whether you're trying to save for a vacation, pay off debt, or simply get a better grip on your spending, budgeting can be the game-changer you need.

In this article, we’ll break down how to get started with budgeting in a fun, easy-to-understand way. Let’s dive in!

Step 1: Get to Know Your Money

Before you start drawing up your budget, it’s essential to get a clear picture of where your money is going. This is the part where you take a good, hard look at your income, expenses, and any debts or savings.

This can be daunting at first. I use to get mixed emotions about our finances. On one hand I would like to know where all of our money is going but I don't want to know how much we spent on unnecessary expenditures.

Track Your Income:

Your monthly income is the foundation of your budget. This includes your salary, any freelance work, side hustles, or passive income you might have. It’s important to be realistic about how much you earn each month after taxes.

I personally would budget off of an average monthly income. Being on the conservative side is not as detrimental as thinking that you make more than you really do. If you use the conservative number, you could end up with extra money, however, the other way ends up with you possibly be short for the month.

List Your Expenses:

Next, you’ll need to track what you're spending. Break it into categories like:

  • Fixed expenses: Rent, mortgage, utilities, phone bills, loans, etc.
  • Variable expenses: Groceries, gas, entertainment, clothing, groceries, etc.
  • Discretionary spending: Dining out, subscription services, coffee runs, etc.

Don’t forget to include savings or debt repayment as an expense! (Student loans are the worst) This part may take some time to track, but it’s important to be thorough. Use apps or simple spreadsheets to help you keep tabs on your spending habits.

Step 2: Set Your Financial Goals

Now that you know where your money is going, it’s time to figure out where you want it to go. Financial goals are personal, but here are some common ones to help get you started:

  • Paying off debt: If you have credit card debt or student loans, paying them down can be a priority.
  • Building an emergency fund: Having 3-6 months of living expenses saved up for unexpected situations is crucial.
  • Saving for a big purchase: Whether it’s a new car, vacation, or home, having a dedicated savings goal helps you stay on track.
  • Retirement savings: It’s never too early to start saving for the future.

Be specific about your goals! Instead of saying, “I want to save money,” aim for something concrete like, “I want to save $500 for my vacation in 6 months.” Having more concrete goals, gives you a 'finish line'. You will be able to track your goal, rather than saying I have saved X amount of money, this allows you to say, I'm 60% of the way towards insert goal.

Step 3: Choose Your Budgeting Method

There are plenty of ways to organize your finances, so pick the one that works best for you. Here are a few popular methods:

The 50/30/20 Rule

This is a simple and widely-used method:

  • 50% of your income goes to needs (rent, bills, groceries).
  • 30% goes to wants (entertainment, dining out, hobbies).
  • 20% goes to savings and debt repayment.

This is pretty simple way to distribute your fund. Although I know when we started out this seemed like it would the easiest, but we just had too much debt at the time.

The Envelope System

This is an old-school method but can be really effective for some. You allocate cash into envelopes for each category of spending (like groceries, gas, or entertainment) and once the envelope is empty, that’s it until the next month. This can help curb impulse spending and keep you on track, but we live in the digital age. This could be difficult for some due to that.

Zero-Based Budgeting

With this method, every dollar you earn is assigned a specific job. When your income equals your expenses, savings, and debts, your budget “balances out to zero.” This is great for those who like to be precise and know exactly where every dollar goes.

With my husband being an accountant, this is how we budget currently. Everything has a place and everything is accounted for all at the same time.

Apps & Tools

There are also tons of apps out there, like Mint, YNAB (You Need a Budget), or even simple spreadsheets that can help you automate and track your budget. If you prefer technology over paper, this could be a great way to get started. I am a paper and pen girlie while you could imagine that my husband is a computer guy. So many pivot tables.

Step 4: Stick to Your Plan (But Be Flexible!)

Once your budget is set, it’s time to implement it. This is where the magic happens, but it requires discipline! However, be kind to yourself. There may be months where you go over budget in certain categories, or unexpected expenses pop up. The key is flexibility. Adjust when needed, but always stay aware of your financial goals.

Try to avoid the “I’ll fix it next month” trap. Every small step you take towards sticking to your budget gets you closer to your financial goals. I fall into this trap a lot, give yourself grace.

Step 5: Review and Adjust Regularly

As life changes, so should your budget. Maybe you get a raise, or perhaps your rent increases. Review your budget regularly (at least once a month) to see if adjustments need to be made. Tracking your spending and seeing how close you are to your goals can be super motivating!

If you notice you’re spending more on certain things than you’d like, consider finding ways to cut back. It’s a learning process, and sometimes you have to tweak things to see what works best.

Tips for Budgeting Success:

  • Start small: If budgeting feels like a big task, start by tackling one category at a time. Focus on your biggest areas of spending and work your way down.
  • Use cash for discretionary spending: If you tend to overspend, try using cash instead of a debit or credit card. Once the cash is gone, you're done spending.
  • Avoid the guilt trap: If you go over your budget in one category, don’t beat yourself up. Learn from it, adjust, and move forward!
  • Celebrate your wins: Whether it’s hitting a savings goal or paying off a small debt, celebrate your successes. Budgeting isn’t about deprivation—it’s about control, and you deserve to feel good about it! Out goal has been lowering our debt, so every time something is paid off, we split the payment. Meaning that we give ourselves a 'raise' of half the payment and the other half gets moved to another debt. Still reaching our goals while also celebrating at the same time.

Wrapping It Up

Budgeting doesn’t have to be scary or stressful—it’s just a tool to help you take control of your money and reach your financial goals. By following the steps above, tracking your expenses, setting realistic goals, and sticking to your plan, you can start making smarter financial decisions today.

Remember: budgeting is a journey, not a sprint. Start small, stay consistent, and before you know it, you’ll be in control of your finances and well on your way to achieving your dreams!

Happy budgeting!