Budgeting for Beginners

Budgeting for Beginners

by Corey Poulosky on Apr 6, 2017

This article was first posted at https://www.fulfillinglife.com/insight/budgeting-for-beginners/

If you don’t use a budget system to track your expenses, don’t worry, you’re not alone.

A budget is a monthly plan for your money that uses your income as a cap for your spending. In fact, a budget is the first step to living within your means and identifying areas where you can cut back on expenses to put more toward your saving goals.

Budget basics

The first step in creating your budget is listing your various sources of income and amounts. To be sure you live within your means, you shouldn’t spend more than you earn, so this monthly total is important to know.

Next, determine how you spend your money, otherwise known as expenses. Track your spending for a month. Gather bills and receipts, including online receipts, and don’t forget occasional splurges like new shoes or concert tickets.

You may want to group expenses into the following categories:

  1. Fixed committed expenses: essential expenses that are the same from month to month, such as rent or mortgage, phone bills, utilities and insurance payments.
  2. Variable expenses: essential expenses that vary from month to month, such as food and clothing.
  3. Luxury expenses: expenses for things you like, but don’t necessarily need.

The important thing to remember about budgeting is to create a system that works for you. Whether you fill out your income and expenses in writing, record your expenses in an Excel spreadsheet or use one of the many online budgeting programs and apps, find a system you can stick with and feel comfortable using.

Saving more money on a budget

Once you complete an initial overview of your spending, create more detailed categories to see where your money is going and where you can save. For example, if you make a dining out category, you may discover bringing lunch to work at least two times a week can save you upwards of $60 a month. Or, you may recognize that your morning coffee purchase actually costs you about $100 a month. By making coffee at home you could put that money toward a savings goal.

At the end of each month, see how much you’re actually spending in each category and how much income is left over. If you’re still looking to cut additional costs, start with luxury expenses, followed by variable expenses. Budgeting will initially require some extra work and organization, but the extra effort you put in now may go a long way toward helping you pursue your financial goals.


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