(…without losing your mind.)
Don’t close the tab! I know, there’s a dread nastiness associated with budgeting. And I’ll be honest, at the outset, it can feel both painfully overwhelming and terrifyingly distressing. However, we’re gonna work on that. Because truly, setting a budget is simply telling your money where to go instead of it skipping away from you with gleeful abandon. Don’t say you don’t know what I’m talking about. We ALL face those moments of wondering where the heck all the money went. (Pretty sure it’s sipping drinks from a pineapple on a beach somewhere.)
The honest truth, the first month is the most difficult. The few following can be a bit bumpy, but not so bad that the oxygen masks drop down from the turbulence. What makes month one hard is the lack of data. You’re gonna have to look for that and go with your best guess for things you don’t know.
Step One:
Gather the number of all income you cleared in the last month. All. From your day job, from your side hustles, any passive income like bank interest or Twitch payouts. Just the income. List them all and the amounts. Place a star by any of them that are consistently variable. For example, tips, DoorDashes, or mowing Nana’s lawn for grocery money. Add them up. Tada! Step One accomplished! Take your win!
Step Two:
List all your spending for the past month. All of it. ALL. Yes that gems pack you bought for your mobile game counts. Same for that impulse $50 Uber Eats. Rent, utilities, internet, mobile telephone, every streaming subscription, haircuts, new shoes, groceries, the dollar you tossed in the offering plate. If you spent it, you list it. If you paid cash for something, list it with an approximation of how much. Put an arrow by any of these that are fixed, for example your rent, your cell phone and your Netflix sub. (I know, they keep raising prices but not on a month-by-month basis… for now.) Add up all that spending. Et voila! You’re done with Step Two. Pat yourself on the back or snuggle your kitty. Whatever brings you joy.
Step Three:
Subtract your spending from your income. With good hope, this number remains positive and not negative. If you’re spending more than you bring in, extra work will absolutely be needed. Sorry.
3A. If your income is greater than your spending, write down whatever the surplus is and make a note of it to one side. You’re going to base your budget this month based on those numbers. However, if there’s a huge amount of variable income, for example, because you’re a server and get paid mostly in tips, there’s extra work to be done.
3B. If your income is less than you’re spending, you have a couple of choices. First, find more income. Maybe you’re not side hustling yet. Now would be an excellent time to pick up grocery delivery. Second, look at your spending and see what, if anything, you can eliminate to balance the equation. Maybe you don’t need Hulu, Disney+, and Netflix. Pick one and cull the others. Or if you’ve already got Prime paid for the year, cancel all three streaming subs and use Prime Video for a while. Are you making regular stops in the drive through? Eliminate them.
Step Four:
Breathe. Nope, nothing else, just breathe. Deep breath. In. Out. Breathing.
Step Five:
Formulate your battle plan. This will vary based on your personal finances, any holes you might have forgotten or missed, if you’re upside down on your spending. If you have extra, this is where you choose to deploy it. Do you put it in savings in case of a rainy day? Do you put it towards paying down your student loan principle? Do you use a little of it to splurge on a new nail polish and then the rest to generously tip the barista at your favorite coffee shop? You need to make sure for this coming month, all necessary and recurring bills are covered. If there’s a little extra fluff in there and you’re cutting it close, maybe trim those back.
If your negative on income to spending, here’s the challenge: Find what you don’t absolutely need. Shelter you need. MCD’s 5 nights a week? Ehhh probably not. That’s why you have Momma and her meal plans, right? If you are truly in a position where there’s nothing left to cut and yet you don’t have enough to cover those expenses, you definitely have an income problem not a budget problem. Your priority becomes either finding a better paying job or any side job you can pick up away from your primary income, be that couch flipping or transcription work.
And with that, you have conquered the first stage of budgeting! Huzzah! Okay please don’t cry. It’s gonna be okay. This is just a rite of passage that we all have to go through.
Bonus Tip: Food and eating out is almost invariably the line item with the most wiggle room for improvement. I’m not saying we stop eating entirely. But definitely purge meals from outside the home. Also look to improve your grocery spending by meal planning and prioritizing nutrition over treats.
