How to Budget Finances As If It’s Your Full-Time Job
This post may contain affiliate links. Click here to read my full disclosure.
Learning how to budget finances can be intimidating and downright scary. But it’s an absolute necessity if you’re going to reach your financial goals.
My husband and I have made some terrible mistakes when it comes to money. We had a habit of trading in vehicles frequently, often financing the negative equity into the new loan. We finally got out of our upside-down car loan mess, but it was an eye-opener.
I’ve been budgeting since I was 10 years old. Not even kidding. My parents really sucked at managing money, and I was forced to grow up at a very young age.
Although I learned how to budget as a kid, I had a problem with emotional spending and not tracking all of my expenses. Just because I knew how to budget didn’t make me exempt from making some stupid mistakes.
There was a time in my early twenties when I was almost evicted, and my Grandma had to bail me out.
Later on in life, I thought because we started making more money, we deserved nice things (like new cars, 4 wheelers, electronics, etc).
If you want to reach your financial goals, you have to be willing to get real and raw. Be honest with yourself about why you aren’t financially secure.
When I finally recognized what our problems were (including spending triggers), I became obsessed with budgeting, and I want to share that obsession with you!
How to Budget Finances
The first thing you’ll want to do is take out a notebook. Some people use spreadsheets and fancy software or apps, but I prefer pen and paper. It just makes my goals feel more real (if that makes sense). So grab your notebook and a pencil, gather all of your bills and recent paycheck stubs (or direct deposit amounts).
I create a budget every time we get paid rather than once a month. I just feel better knowing exactly what I have to work with every time we have money in our hands. Tomorrow is payday, so today I’m writing out my budget.
Here is an Example of a How to Budget Monthly
Budget Guidelines and Percentages
You need to know how much you should be spending in each category of your budget. Here are some common percentages you should follow. Keep in mind that if you live in a high cost area, you’ll need to adjust the numbers a bit.
Budget Percentages of Net Income:
- Housing – 25-30%
- Car Payment – No more than 10%
- 60% – Needs, Then Wants
- 30% – Paying Off Debt
- 10% – Savings
Obviously these percentages don’t add up to 100% total. Your car payment is lumped into the 30% debt repayment percentage, and your housing is a “need”.
It definitely helps to have a plan…to tell your money where to go. You work hard for your money! Make it work for YOU!
The purpose of a budget is to help you gain control of your finances. If you’re living paycheck to paycheck, you are at the point where you don’t have a choice! You must make changes starting today!
And what works for one family may not work for you. Once you start looking at your finances as a serious matter, you’ll start dreaming of all the things your money can do for you!
The 50-20-30 Budget Rule
Senator Elizabeth Warren brought awareness to the 50-20-30 rule of budgeting in her book All Your Worth: The Ultimate Lifetime Money Plan.
It calls for the following budgeting percentages:
- 50% – Needs
- 30% – Wants
- 20% – Debt and Savings
If you work hard and focus intensely on your goals and dreams, you should be able to handle your debt in 1.5 to 3 years based on my percentages.
It can be done, folks! You just have to put the effort forth and make a plan. I don’t like the phrase “stick to the plan” because it implies that the plan can’t be changed. Our budget changes once a quarter (at least). It may take a while to work it out, and that is okay!
American Consumer Credit Counseling ACCC Budget Recommendations
Get this…I saw an infographic on Pinterest today from ACCC recommending the following percentages for budgeting:
- 35% – Housing
- 20% – Transportation
- 20% – Savings
- 20% – Medical/Clothing/Other
- 5% – Credit Card Debt/Student Loans/Other Debt
Okay…this company is supposed to exist to help the public. They’re supposed to be able to help you consolidate debt to make it easier to repay.
How are you supposed to ever gain traction when you’re only devoting 5% of your income to debt??
This method is flawed, and I would not recommend it. The best way to budget is to focus on your goals. If your goal is to pay off debt, you need to devote as much of your income as possible to paying off debt.
You can learn about the different methods of paying off debt in my post about the debt snowball vs the debt avalanche.
Best Budgeting Spreadsheets
Sometimes, a pen and paper won’t work. I realize that some people are geeky spreadsheet people. And that’s totally okay. Here are the best budgeting spreadsheets you can find online to help you with creating a budget:
Best Household Budget Planners
Bullet journaling is super popular right now, but I am more of a functional planner. I don’t need all the washi tape and stickers to keep me on task.
It’s important to budget every single time you receive income (and not just monthly).
I teach this in my Better Budget Blueprint course. This is vital to your budgeting success!
For years, I used this simple family household organizer from Dollar General. It’s cheap and does the job just fine!
Try not to get overwhelmed by all of the ways to track your budget. The most important thing you can do is figure out which method works for you and stick with it!
Check out my 5-day budget boot camp where I teach you how to build a better budget in just 5 days.
I’ve done all the things! Girl, I’ve washed my face. I’ve trashed everything that doesn’t spark joy. I’ve walked the baby steps. I’ve cried. I’ve prayed, but my perfectionism has really held me back.
Perfection Hangover can be crippling. Stop comparing yourself to others and start living your best life! That’s why PH exists! I want to encourage you to take control of your money, your blog, and your business.