It’s always a good idea to create a realistic budget to keep track of your spending habits and the income you’re bringing in. It’s the first step toward practicing financial well-being, and it’s easy to do! Budgeting can be scary for a lot of people. After all, who wants to see every dollar leaving their pocket? But it can actually be very freeing! Instead of worrying or feeling guilty about your spending, you can stay on top of your finances and feel confident about whether your purchases are fitting your goals. If you experience guilt over spending money, you may feel empowered to know whether or not you’re saving enough money.
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Step 1
Find a place to track your budget. You can use an app, a paper planner, Google Sheets, or a website like Notion. I prefer using Notion because it makes it easy to create tables and sub-pages. All of my information is stored in one place, so it makes a convenient place to also create a realistic budget. I’ve attached a copy of my budgeting template here. You can duplicate it to add it to your Notion page.
Step 2
Open your bank account, Venmo, PayPal, and anywhere else you spend or send money. You’ll want to look at a few months to see what, on average, you’re spending in key areas. Your expenses may vary from someone else’s, but the main categories are as follows:
- Rent or Mortgage
- Utilities
- Internet
- Groceries
- Insurance
- Gas
- Phone Bill
- Subscriptions
- Entertainment
Step 3
Write down your key categories for expenses in a column. Now, create a realistic budget for each category. Realistic is important because you don’t want to feel guilty for spending more each month if you’re not being honest with yourself in the beginning. When I first started budgeting, I thought I could save money on groceries. After all, it was one of the more flexible categories. However, some weeks, I ended up with less food than others and I felt more hungry all because I was trying to stick to an unrealistic budget. It’s important to make sure your budget fits your basic needs. Track your expenses each week and set a reminder to write down your expenses weekly by looking through your bank account.
Step 4
Track your income in a separate area. Break it down by job and paycheck.
Step 5
Calculate your net income for each month by subtracting your expenses for the month from your monthly income.
Step 6
Once you’ve taken the previous steps to create a realistic budget, set goals for saving money. Start by saving up for an emergency fund which should cover 3 months of essential expenses. You can save for your emergency fund and other long-term saving goals in a high yield savings account where it will make money than just sitting in your bank account.
