Budgeting Basics For Beginners

Budgeting Basics For Beginners

Do millennials spend all of their money on avocado toast and $5 cups of coffee? Maybe more than we should. Though budgeting isn’t a fun dinner table topic, discussing how to wisely spend is the only way we can learn from each other’s financial successes and failures.

In the consumer culture we are a part of, money seems to leave the wallet far too easily and quickly. As someone who has been in the working world for 4 years now, I have begun learning the importance of taking a hard look at how I spend and save. I have a long way to go, but hopefully, the few tips and tricks I have picked up along the way will encourage others to join me in the journey to financial autonomy and success.

Let’s talk budgeting…

Know your numbers. If you hold your breath and close one eye when logging into your bank account, it’s time to get over it. The best place to start when it comes to your budget is awareness. Take a hard look at reality and track your spending over the past 3-6 months. Next, tally up all current debts.

Create a rough monthly budget outline. Start by breaking your expenses into categories. For example: housing, transportation, food, lifestyle, insurance & tax, savings, and giving. You can create as many line items as you’d like within those categories. There are great templates online that make this part easy.

Crunch the numbers. Assess your income vs monthly expenses, assign numbers to the budget categories you create and make sure you’re setting aside some money to save/tackle your debts. This part can be tricky. You may want to spend less money eating out, but if you cut your restaurant budget too much, you’re setting yourself up for failure. Try to find the balance of being realistic while allowing wiggle room. If this is your first month making a budget, give yourself grace. It takes around 3 months to fully understand the right numbers to assign to each category.

Track your spending. This is where the discipline kicks in. I was advised to set a budget meeting with myself at the beginning of each month. This meeting will allow you to adjust the upcoming month’s budget as needed by planning for any irregular expenses and realizing which budget categories need to be tweaked. I use an app called Everydollar to help me track my spending. Apps like Mint, YNAB, and GoodBudget are great too.

Save for something fun. Along with contributing to your 401k, paying off debts, and saving up an emergency cushion, make sure you’re saving with motivation. Have you dreamed of trading in the old clunker for a new car, making a down payment on your first home, or sitting front row at a concert for your favorite band? Saving is made more enjoyable when that dream is in the back of your mind.

Have a support system. Have friends and family around you to support you in your financial journey. Is there anyone in your life that admirably manages money? In my life, there are a few people my age and much older that I go to before making any major financial decision. Knowing I’m getting advice from people who have my best interest at heart brings peace of mind.

Through learning to track what I spend; I’ve been able to find ways to cut down on unnecessary expenses (read: multiple streaming subscriptions) to spend and save in a more fulfilling way. Before I began this process, I thought budgeting would add to my money-related stress. However, I was pleasantly surprised to discover that it provided freedom and peace of mind.

Remember, no budget is perfect. Everyone manages their money differently, so resist comparison and find what works for your lifestyle. For me, that budget includes avocado toast and fancy lattes.

PS – Most of the tips I’ve listed above were a result of a class I recently completed called Financial Peace University. I recommend looking into similar classes or support groups to get you off on the right foot. This is a marathon, people, not a sprint!

About the Author

Virginia Wilson is the Marketing Content Specialist at Coldwell Banker Caine. As the content specialist, her job involves two of her favorite pastimes – social media & writing! Virginia also loves walking with friends, trying new coffee shops, and experimenting with recipes.