Budgeting 101: The Basics


Ahhhh money. Can’t we all use a little more?

Most of us are already maxing out how many hours we can work, and even then, it can sometimes feel like you never get to really enjoy your paychecks and the fruit of your labor. 

I used to check my bank account to make sure I had enough to pay for whatever I was in line at the store for. 

Managing money is one of the most important skills we need to learn as adults, an unfortunately it’s not one you learn in school unless you major in it.

For the rest of us, I’m sharing a simple budget starting guide. Easy to create and manage, it will help  you stretch your dollar. Because the secret to a healthy and functional budget is: 

Actively budgeting + reasonable goals = more $$

If you are constantly updating and managing your budget, and you set reasonable goals, you can really see a difference in how you track your money. You will be able to see the flow in and out of your bank accounts, and you’ll be able to adjust and manage it to be able to have more breathing room, and not stress about whether you’ll be able to save some extra cash or not this month. 

I’m here to give to the basic run down on how to get your budgeting started. With practice, you’ll be well on your way to improve your way of life. Trust me, it can be that powerful.

1. Start with your essentials list

The first step to budgeting is to calculate just how much you need to meet all of your basic needs

*One tip I always recommend for this list is to OVER estimate a little bit. For example: if your monthly phone bill is $122 a month, leave it at $130. It’s a really useful way to give yourself some cushion. Another good one is your rent. If your rent is $775, you can just round it to $800. Generally, don’t go over more than $10-$50 in overestimating though. Once you have your amounts set for this category, keep that number in mind.

 I’ll do an example with you to help you follow along. 


  1. Rent ($1272 –> $1300)
  2. Food (home-cooked only) ($350/month)
  3. Utilities (electricity/water/gas) ($150/month)
  4. Car payment ($256 –> $260)
  5. Gas ($80/month)
  6. Phone bill ($125/month)
  7. Internet ($100/month)

Essentials TOTAL: $2,365/month

2. Debt list

Now the next important thing you should account for is your debt. Student loans and credit card payments go right here.


In our example:


  1. Card 1: $30/month
  2. Card 2: $25/month
  3. Student Loan: $100/month
  4. Card 3: $45/month
  5. Card 4: $75/month

Debt TOTAL: $275/month

3. “Other” List

I like to keep an “other list”, in which I like to account for other things that I tend to spend on during the month, which could vary for you. Stuff you can always be flexible with, and change based on how often you do it. Things like going out, eating out, movies, etc. Let’s continue with our example. 


  1. Entertainment: $300/month
  2. Eating out: $100/month
  3. Monthly subscriptions: $28 –> $30

Other TOTAL: $430/month

4. Your combined “bills” total

 Add up your lists. This is how much you spend per month.

In our example, my combined total would be:

Essential + Debt + Other = $2365 + $275 + $430

Combined TOTAL= $3070/month.

Turn this into annual calculation as well, to give you a bigger picture, and something you can compare to your annual income.

Combined TOTAL: $36,840 annual spent

5. Your income calculation

So now that you know how much you spend, you can start thinking about how much you make, or how much you should make to cover all of your expenses.

*Another note I will also add here is that you should underestimate a little bit. For example, if last year you made $22,359, just keep it at $22,000. I’ll explain this in more detail later. 

  1. In our example, let’s says we have a family of 2 adults, who both work. Their average income has been about $22,000 and $20,000 (underestimated) over the last few years.

TOTAL INCOME: $42,000 annual income

6. Comparisons

Here’s the real brainteaser part. Let’s compare your annual spent, and annual income numbers.

How do they look?

A. If your annual SPENT is greater than your annual INCOME: You need to adjust your budget. The easiest place to start is by increasing your income. Whether that means side hustles, a second job, or any other way to supplement your income. The second step would be to adjust your annual spent list. Look for places you can cut or reduce amounts. 

B. Are your two numbers about EQUAL? If the difference in your amounts is by $100-$400, you also might need to think about how to lower your budget amount, and increase your income amount. Even though you may have some money left over, it’s not enough for emergencies that will more than likely come up. You also won’t have much left over if you’re trying to save money for something.

C. The best scenario you want to be in is to have a few grand leftover. This gives you cushion for emergencies, and sets you up to save money.

*In our example, lets compare: I have $36,840 ANNUAL SPENT vs. $42,000 ANNUAL INCOME.

Which leaves us with about $5,000 leftover annually, which is a good cushion.

Why did you over/under estimate?*

Let’s talk about my under/over estimation. So I told you to overestimate your spending, and underestimate your income. Why? Well I told you it gives you cushion. More specifically, if you actually spend less, and make more, you’ll find yourself nicely surprised with an extra bonus every month or at the end of the year when you compare your SPENT vs. INCOME

Plus, we tend to have to spend money out of the blue, and things like sick days and family emergencies can take a way from our income, which is never a bad thing to try to account for with this method.

So there you have it. Budgeting in 6 easy steps.

Additionally, here’s some tips:

*Check in with your budget bi-weekly/monthly: Make sure you’re on track with your budgets. Are your spending more in this month? In what areas? Can you reduce it, or do you have to adjust for it?

*Try to account for everything: Don’t just budget your responsibilities and not add in fun, because that’s not helping anyone. Just because the $150 you spent last Friday at the bars and club wasn’t on any bills, doesn’t mean you didn’t spend it. Give yourself a set amount to spend on “entertainment” instead, to account for these outings.

*Do calculations and keep track of your bank statements: Check your bank account every couple of days. Make sure your spending is right about where it should be. It’s a good habit to keep. Fraud can happen to anyone.

*Leftover money should always be used as cushion or emergency funds, or savings: I always like to have at least $100 in my bank account at all times just in case anything happens. If I ever have some left over that’s over $100 and I know I’m not spending until next paycheck, I’ll then put it in an emergency or savings fund. It’s the best practice to accumulate some extra $.

*SELF-DISCIPLINE: If you want to lose weight, you have to commit to the healthier lifestyle. If you want to save, you have to commit to the budget. Remember your goals. It’s ok to splurge a little on yourself every once in a while, but not every time you have extra money. 

Any other budgeting tips you have to share? Let me know in the comments!