Budgeting for Beginners


Like me, many of you are learning to walk the path of the twenty-something. Recently graduated, working day jobs, paying bills, and experiencing many of the frightful “adulting” issues for the first time. Whether it’s getting kicked off your parent’s Netflix subscription, or learning to cook for yourself, we all have lessons we could have only learned during this time. Budgeting is one of them.

DON’T RUN! Applying financial standards to your life is a very liberating, and almost comforting thing, offering a sense of ease and control over your financial standing. I know you may be thinking, “I’m only in my twenties. I don’t make enough to see the value in budgeting. I don’t have many financial obligations to budget for.” Which are all of the reasons to start a budget. You are in your twenties, the earlier you do this the more you can benefit from financial responsibility. A small income is an even better reason to budget, because you can anticipate recurring costs, and get every penny’s worth of your money. If you don’t have many financial obligations to account for, where are you putting that money? Does it come to mind easily? Not surprisingly, most young people with disposable incomes turn a lot of cash on eating and drinking, but rarely know just how much they actually spend every weekend, every day, every month, every year.

Budgeting is about telling your money where to go instead of wondering where it went. It can be a revealing practice for many, and allows you to reevaluate the ways you use your money.

Down below you will find my basic budgeting spreadsheet that you can download and follow along with, just click on the chart to go to the Google Doc. Feel free to copy it, print it, whatever.

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Consider these your cheatsheets to budgeting.

how to do this

Start with the Annual Budget and work from the top. What do you earn before taxes, per month and year? How much do you pay in taxes? Your Net income is your Gross Salary minus your income taxes, which tells you what money you are really working with. Not too bad so far!

Now, simply fill in everything you know. Namely, recurring costs that you know off the top of your head. Your rent, your car payments, etc. Then, start to take a look at the less obvious categories. For you, that may be food, fun, travel, or subscriptions. At this point, I am going to ask you to do something very scary…look at your bank statements. As far back as the last month or two, and take a focused mind and a red pen to it. Add up all of the totals you spent at the grocery store, at gas stations, on entertainment, on subscriptions. You get the gist. Place the actual dollar value to each of these categories, and let the equation do the heavy lifting. Basically, subtracting all your spending from what you earn. In no time, you will see exactly how your spending measures up to your earnings.

And the liberating thing about this practice, is you discover how many chicken shit things you were paying for and never knew about. We forget to cancel those free trials after those 7 days, and just like that, we are unknowingly subscribed. I recently reevaluated my personal budget and found out that I was paying for a Youtube Red subscription and 6 magazines that I had no idea about! And thankfully, many companies have great cancelation policies, and sometimes you can be refunded.

As you go through this budget, you may find line items that aren't expenses for you. For example, I don’t get my nails or hair done so that would be items I could either delete or leave empty. Likewise, if you have an expense that isn’t included in the budget, simply add the line item and calculate for it.

Now, you may be looking at your budget and noticing that certain items are taking more of your money than it should. This is when you take real control. Duplicate your budget and it’s values. But this time, replace your areas of over-spending with what you want and should be spending on those things, rationally. For example, if “Fun” is absorbing 60% of your income, you should probably set a ceiling to that spending. Setting spending parameters allows you the financial freedom to incorporate other things into your life. The possibilities truly are endless once you have this knowledge.

Once your Annual Budget is complete, the rest is plug and chug. How much are all of your expenses each month? When do they come due each month? That Monthly Budget will be your Financial Bible. If you follow it, you will be delivered to the Financial Promised Land. Financial freedom and agency.

This budget is by no means a cure-all to financial irresponsibility. But being honest with your spending, putting pen to paper honestly and proactively can be truly transformative.

Thank you for taking the time to read this less glamorous, but really important blog post. Let me know what you think, and as always, feel free to share with those who may need it. Let me know what you want to see on the blog, and I’ll see you next week with another post!

Angie StefanecComment