How I Started My First Real Budget (A Step-by-Step Guide)

I’ve gone for most of my life without worrying about budgeting. I always had enough money to get by, so I didn’t think a budget was necessary. I could afford to buy what I needed, so I wasn’t thinking about saving or cutting down monthly spending. Now that I’m paying all my own bills, including rent, insurance, car payment, and student loans; I have a bit more to worry about.

How to Start a Budget

Throughout the past few months, I’ve been tracking my spending and implementing a budget. Tracking my spending has helped me to realize when I’m making unnecessary purchases. It’s helped me to cut down on those and focus on spending on important things. Having a budget has allowed me to see where my money needs to go, and what I have leftover for fun spending.

But why would I want to keep a budget? Doesn’t that mean only spending on essentials and not things I want?

Keeping a budget is not about saving all your money and never spending on anything you want. Not at all, or I wouldn’t even think about doing it. It’s about being aware of where your money is going each month. This helps to keep stress and money anxiety way down because you have more control over your money habits.

For starters, knowing where you’re spending money currently is so important. I tracked my spending for 3 months before even starting a budget. This helped to see what I need to spend on vs. what I want to spend on each month. Here’s a link to my free, printable Monthly Spending Tracker. You can either print it out or fill it out from your computer/phone. (I would recommend printing it out, at least the first time until you get the hang of it!)

For months, I’ve used this to track my spending because otherwise, I wouldn’t think about it at all! I created 7 different categories including food/drink, household needs, and personal spending. This helps me so much to keep track of what I’m spending my money on each month. And try not to go overboard on the personal spending. 😉 You can track your spending in the doc itself, or print it out if you prefer writing things out.

Once you understand where you’re spending your money normally, you can start keeping a real budget.

Here’s my step-by-step guide:

Print out the Monthly Spending Tracker.
Keep track of everything you spend money on in a month, for 3 months
Add up your income and subtract your spending each month, to see your profit
Go through your Spending Tracker and see which purchases are needs vs. wants
Create a budget, including your rent/bills, groceries, car payment, loan payment, insurance, and any other reoccurring payments.
Add up all of the above payments, and subtract them from your monthly income [Monthly Income – Monthly Bills = Extra Spending Money]
You now know how much extra spending money you have either to put in savings, investments or spend on things you want! A great way to stay on track with budgeting and monthly spending is with a Budgeting Planner. This allows you to set monthly goals, keep focused and organized, and easily stay on track with your finances.

Extra tip: See if there’s anything in your monthly bills that you can cut down on, to free up more spending money! For example – I recently switched car insurance companies to a less expensive option. I also switched to paying for 6 months at a time, instead of monthly. This saved me $60/month and I’m still getting all the same coverage. It just takes some research and seeing if there are other options available for less than you’re paying now.

Extra Resources 🙂

One of the books that I mentioned in my Reading Challenge post has some great tips on spending money. In 4-Hour Work Week, I learned about how to get creative when it comes to earning an income. He talks about innovative ways to make money, besides your typical 9-5, and how to spend it on things you love. Such as travel, adventuring, and living the type of lifestyle you truly want to be living.

A great way to earn money on purchases you would already be making is with Rakuten (formerly Ebates). I’ve used this service for years to earn cashback on purchases I was already planning on making. It’s free & easy, so there’s really no downside.

They have cashback deals for a ton of popular brands, including Nike, Adidas, Lululemon, Tarte, Macy’s & more! When you use our link to sign up, you will earn $10 cashback. Which is $10 more to work with in your new budget. 🙂

Feel free to save the pin below if you want to revisit this guide later on!

I hope this guide helps at least a few people out. 🙂 If you guys have any questions, please feel free to comment or email us. We’re always happy to hear from you!

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