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A (Realistic) 10 Step Guide to Budgeting

I read something very interesting the other day about dieting. Apparently, people who track what they eat, lose twice as much weight as those who don’t. Regardless of whether or not they make any changes to their diet or exercise more. Just the act of writing things down and keeping track of them makes people MORE MINDFUL.

The same goes for budgeting.

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The concept of budgeting is similiar to dieting. You need to actively keep track of what you’re eating in order to know where to make changes (eat less, exercise more, etc.) so that you can lose weight. The same goes for living within your means. You have to actually take a look at your spending to see where you can cut back in certain areas, or figure out ways to bring in more money so that you’re not constantly treading water. What I’m going to go over here are basics. Money management is not a one-size-fits-all type of thing and what you see here, is meant to be tweaked. Budgeting is really a personal process that you will actually get better at over time.budgeting, savvybrown, nobuymonth

  1. Get organized – You really can’t make any changes until you know what you’re changing. Download your bank statements, your home expenses and credit card bills, your insurance policies, mortgage info, retirement account information, subscriptions and anything else that you pay for monthly. Put it in a folder (either real or virtual) and put it somewhere that you can get to it easily. (Extra credit: Download your retirement account and life insurance info as well so you can see how much you’ve accrued)
  1. Assess the situation – Get a legal pad, or piece of paper and make a simple two column list. In one column write down the name of the bill, or company that you owe money to and in the column next to it, write down how much you are supposed to be paying monthly (whether or not you are making those payments right now is irrelevant). If you are paying for something quarterly, then multiply the payment by 4 and then divide that number by 12 in order to calculate your monthly payment. Everything goes on this list! DO NOT MAKE THIS LIST FROM MEMORY. Use your current bank statement to help remind you what you’re spending your money on.By the time you finish this assignment, you should have a realistic idea of what you owe and where you money is going. (Extra credit: Get your credit report for free from Credit Karma and track your billing cycles)
  1. Determine your monthly net incomeYour net income is what what you actually take home out of your paycheck, (not what you say you earn interviews). the thing that people often forget is you can easily make more money than just your take home pay. Below are some options:

eBay – If you have used (but not ancient) electronics, collectibles like comics, coins, dolls and video games, or designer clothes and accessories in good condition, you can sell them on eBay and make (at least) grocery money.

CraigsList – An excellent option for selling larger sized items like furniture.

PoshMark – If you own an iPhone, and don’t mind some of the fees, PoshMark makes it really easy to sell used designer clothing and accessories by just taking a picture with your iPhone and uploading it into the PoshMark app

Interest bearing accounts – Admittedly it’s probably not much, but it’s something.


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  1. Find hidden money – Are there hidden fees that you’re paying for because you have more than one bank account and you’re not meeting the minimums? Did you make a purchase that has been quietly charging you a monthly fee that you don’t even know about? Check your Payal account, our bank statements, your credit card bills again. (You should know EXACTLY where they are if you did #1). If you see anything that you don’t want to pay for, cancel it. Call them, do whatever it takes to get the fee off of your account. (Extra Credit: Check with your credit card company to see if you can pay your bill with points!)
  1. Set Goals – I suggest making financial goals for 6 months from now. It’s not so far in the future you’ll forget about it, but it’s not so soon that you get overwhelmed. BE REALISTIC. You are probably not going to pay down $100,000 worth of debt in 6 months unless you win the lottery. A more realistic goal is to pay down $500 worth of ALL your credit card debt in 6 months. Another would be to stop paying for storage space that you don’t need. (Extra credit: Revisit your goals on a monthly basis)
  1. Create your Budget Now that you know what you have, what you make, and where you want your money to go, you can sit down and actually make a projected budget. this is the budget that assumes you make enough to cover all of your expenses. (It’s fine if you don’t, but YOU NEED TO KNOW) Here’s what you do:

Add up all monthly expenses. (That’s the list you made in #2)

Subtract that number from the total amount of money you bring in monthly. That’s the list you made in #3

If the number is negative, skip to Step#7

If the number is positive, skip to Step #8

Download A FREE Budget Worksheet Here!

budgeting, savvybrown, nobuymonthing out or ordering out – cook your food, and bring your lunch to work

Get rid of retail spending – No new clothes, shoes or accessories, at least temporarily. (Kids are the exception, but try to repair clothes before getting rid of them)

Cancel your gym membership – workout at home for ideas, click here.

Get rid of cable – just keep Internet access

Get rid of your land line phone – Just use your cell phone

Stop going to the dry cleaners – OR every other trip have them press your clothes instead of “cleaning” them

Stop dropping off your laundry – wash it at the laundromat yourself

  1. Stop Autopaying Your Bills – This is going to seem counterproductive but if you’re not used to being on a budgeting, then auto pay is NOT for you. People simply FORGET that they have bills coming due because they’re being automatically paid and they are not actively keeping track of their money. Until you get your spending under control, STOP paying for stuff automatically. There’s nothing wrong with paying online once a bill comes due, just turn off the autopay feature. (Extra credit: Cancel Amazon Prime and other services that hold onto your credit information. Especially in your phone!)
  1. Schedule Your Payments in a Calendar App – Now this part I DO think you should put on automatic. Sit down with iCal, Google Calendar, Office or whatever calendar program you have that’s FREE and has the ability to alert you by email or text when a payment is due. Then go bill by bill and do the following:

Schedule a payment 5 days before it’s actually due at a specific time of day

Write in the calendar entry how much the bill is

Schedule it with two reminders, one 24 hours before and one the day of.

  1. Keep a Journal – You’re going to miss stuff, there are going to be unexpected items that pop up. If you write down what you’re spending everyday, (like a food log) you’ll be able to make budgeting adjustments here and there, or stop a relatively expensive habit that you didn’t know you even had. Then tweak the budget and revise it monthly, or whenever you have time. The more you keep track of your spending, the more you’ll start seeing changes in your spending habits and less time you’ll spend worrying about whether or not you have enough to cover the bills, because YOU’LL KNOW.

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In 6 months see if you’ve hit any of your goals. If you did, great! If not, tweak a few things and try again so you can get hit those budgeting goals by the end of the year. This list is by no means exhaustive. Again, IT’S MADE TO BE TWEAKED! It also doesn’t deal with savings. (You can make savings an actual “bill” you pay if you’d like). Some people swear by the envelope method, others base their budget on what’s left in the bank and not what’s coming in. All of that is fine, but you don’t have to do any of that right now. You’re not there yet. What you need to do right now, is get organized, cut back on your spending and actually track where your money goes so that you can reach those goals!

Understand budgeting concepts, but don’t know where to start? Download this FREE Budget Worksheet to get started!

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Click Here to Download

Some other great budgeting resources to check out are:


Retirement Savvy

                  • What are some of your budgeting tips and tricks?



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