Budgeting for Beginners: A Practical Guide to Get Started

Need help budgeting? It is difficult figuring out how to save money. This budgeting for beginners guide will give you practical steps to get started today. It is all about using a budget that fits your lifestyle. Read this article now and start building your savings account...

I am sure you are constantly hearing in order to have financial success you need to master budgeting.

But, what is budgeting?

How do you budget?

For beginners, this can be a daunting task, but these tips for budgeting for beginners can take all the mystery away from this concept and make it a functional part of your daily life.

A budget does not have to be something that is scary.

In fact, it should be something that makes your life easier.

Since there is no one perfect way to create a budget, I am going to share some great tips that will make it easy for a beginner to build a budget that works best for them.

The key is learning how to fit a budget into your lifestyle. Not trying to fit your life into someone else’s budget.

Budgeting For Beginners

Learn how your income and expenses work for you.  It’s easy for some to say that a budget is simply a list of income and expenses, but since every family has a different set of income and expenses you have to learn how those work for you.

To begin using a budget, you do need to do a few simple things that can make it easy to see where changes may need to be made.

To help you get started, you can print my free monthly budget template.

  • Create a list of all monthly income. This should include your wages from jobs, child support, rental income, and anything that is a consistent source of income.  It should even include things like the $50 per month your friend or family member pays to be on your cellular phone plan.
  • Create a list of all necessary monthly expenses. This list should include the basic expenses that must be paid each month. Things like rent, electricity, gas, water, garbage, credit card debt, student loans, personal loans, groceries, transportation expenses, savings accounts, and medical expenses are a must. These items are the things that you cannot go without paying each month without dire consequences. Yes, savings is a must to keep you out of debt.
  • Create a list of all of the extra expenses you have regularly. This list will include things like dining out, entertainment, splurges, morning coffee, lunch out with friends, new shoes on sale, and similar things you may find yourself spending money on regularly. It will also include things like cable or satellite television and for those who don’t use the Internet for business purposes, the larger Internet plans or phone plans.

As you look at these lists, you’ll be able to visually and easily see where the bulk of your money is going, as well as how much you are spending outside your means.

There are some things that are necessities for some and splurges for others.

A cellular phone with a high minute or data plan may be a must for someone with a home business.

The same goes for someone who works from home and needs unlimited Internet access each month.

For those who only use their phones for occasional messaging, can easily cut back on that plan to build more room into a tight budget.

Again, think about your life and your needs.

Create a functional expense spreadsheet. Budgeting for beginners is all about getting real about your expenses. We’ve already touched on this some, but the real focus of creating a functional expense spreadsheet is to account for those things you absolutely have to manage to pay each month, and then allow yourself a specific amount to spend on other items each month as your budget allows.

Listing out your expenses in columns helps to see how things all into categories in your budget.

  • Housing includes: Rent/Mortgage, homeowners insurance, POA dues, and repairs
  • Utilities includes: Water, gas (heat or cooking), electricity, and garbage pickup
  • Transportation includes: Car payment, car insurance, gas, and repairs
  • Medical includes: Insurance (health, life, vision, and dental), prescriptions, and co-pays
  • Debt includes: Student loans, credit card debt, and personal or bank loans
  • Household includes: Groceries, toiletries, and services like lawn care
  • Communication includes: Cellular phone, home phone, and Internet
  • Entertainment includes: Satellite, cable, Internet upgrades, date nights, subscription services, streaming services
  • Wardrobe includes: Uniforms, replacement clothing, and replacement shoes for all family members.
  • Childcare includes: Babysitters, daycare, nanny, after school care, or parents night out programs
  • Savings includes: Emergency fund, vacation fund, and retirement funds
  • Miscellaneous includes: Splurges for lunches out, after school treats, or extra curricular expenses

{Related: 5 Expenses You Can Cut Even When You Think You Can’t}

If you are living within your means already and simply want to understand how a budget helps, the extra little expenses may not be as tough for you to manage, but you do need to be able to understand that your income should be primarily dedicated to the necessities.

You also need to see where you should make changes to allow more money to go into savings.

Ideally, your budget will reflect a balance leftover each month after all of your expenses that can then be used to pay down debt and save for the future.

I also recommend the concept of paying yourself first. This will help you to continue to build your savings account and eliminate unnecessary expenses.

Adjust your monthly expenses to match your income.  Budgeting for beginners is all about understanding how your money works for you.  After you have listed all of your income and expenses and find that you are either living within or outside your means, it is time to adjust your monthly expenses to make the most of your income.

  • Focus primarily on lowering expenses to funnel more money into debt repayment and savings
  • Remove splurges or wants and focus on needs instead
  • Consider adding additional part time jobs for added income to negate expenses
  • Utilize savings options available to you to lower expenses

{Related: Quit Spending More Than You Make}

These are basic tools to help you adjust your monthly expenses to be within your monthly income.

By using simple tools like living more frugally, or adding an extra source of income, you can easily create a budget surplus that can pay off your debt and put more money into your savings accounts.

After you have taken a look at all of your income and expenses you may be considering adding extra money so that you can begin to save more each month. Check out these 20 Ways to Make More Money.

Budgeting for beginners is all about learning to understand how income and expenses work for your family.

By putting things on paper, or within a spreadsheet to easily look at, you can make it simple to adjust and focus your income toward debt and savings for the future.

Do you have any other budgeting for beginners tips you can share?

This Post Has 6 Comments

  1. This is a great post. When I talk to people who say they want to start budgeting one of the things that’s held them back is they don’t know where to begin. As you noted a great way to do that is to record your expenses and income. When I first created my budget I started by looking at my expenses and income for the previous month.

  2. I have tried several times to get you budget binder worksheets and it is automatically sending me back to the homepage without sending my forms. Help!!!!

  3. I got the email saying that I have access to the budget binder but I cant get it anywhere! It brings me right back to pay for it again. Help!!

  4. HELP! How do I begin a monthly budget if we are already behind on paying bills? For example, I am paying my electric bill that was due last month tomorrow 🙁 and I have a few others the same way. How do I get caught up and how do I budget that? Completely new budgeter here, btw.

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