How to budget monthly for beginners?

50/30/20 rule: One popular rule of thumb for building a budget is the 50/30/20 budget rule, which states that you should allocate 50 percent of your income toward needs, 30 percent toward wants and 20 percent for savings . How you allocate spending within these categories is up to you.

What is a good basic budget?

In the 50/20/30 budget , 50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants. If you've read the Essentials of Budgeting, you're already familiar with the idea of wants and needs. This budget recommends a specific balance for your spending on wants and needs.

How to budget money for beginners for free?

NerdWallet recommends the 50/30/20 budget , which suggests that 50% of your income goes toward needs, 30% toward wants and 20% toward savings and debt repayment. Monitor your credit, track your spending and see all of your finances together in a single place.

What is a good monthly budget?

Setting budget percentages That rule suggests you should spend 50% of your after-tax pay on needs, 30% on wants, and 20% on savings and paying off debt . While this may work for some, it's often better to start with a more detailed categorizing of expenses to get a better handle on your spending.

What is the 50 30 20 rule of money?

The 50-30-20 rule is a common way to allocate the spending categories in your personal or household budget. The rule targets 50% of your after-tax income toward necessities, 30% toward things you don't need—but make life a little nicer—and the final 20% toward paying down debt and/or adding to your savings .

What are 3 priorities in a budget?

Make sure that all three categories are represented in your budget. Prioritize needs first, then wants and wishes . If you have to adjust your budget, it's easier to downsize a want or delay a wish than it is to ignore a need.

What are the 3 main essentials when it comes to budgeting?

Any successful budget must connect three major elements – people, data and process . A breakdown in any of these areas can have a major impact on your results.

What is the 50/30/20 rule?

The 50-30-20 rule is a common way to allocate the spending categories in your personal or household budget . The rule targets 50% of your after-tax income toward necessities, 30% toward things you don't need—but make life a little nicer—and the final 20% toward paying down debt and/or adding to your savings.

What does a start up budget look like?

Regardless, there are a few key components you'll see in every startup business budget template: Operating expenses: ongoing costs of running your business, like rent, utilities, and payroll . Capital expenses: assets your business needs to make money, like inventory or equipment .

How do I start a 50-30-20 budget?

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings . The savings category also includes money you will need to realize your future goals.

Which budget do you prepare first?

Answer and Explanation: The sales budget should always be prepared first. The sales budget is an important component of the budgeting process and it indicates the forecast of units that will be sold in the period as well as the revenue to be earned from these sales.

Budgeting for Beginners (2024)

No matter what your financial situation you need a budget. Budgeting is the financial roadmap for your life. Budgeting can be as easy or as complicated as you want to make it. Let’s jump into everything you need to know about budgeting!

Budgeting Basics for Beginners

Are you a budgeting beginner? You hear people throwing around words like disposable income, cash envelope system, emergency fund, net worth andyou have no idea what they are talking about?

Don’t freak out. In it’s simplest terms a budget is just knowing where your money is going. You have money coming into your bank account. As the days, weeks, and months go by (unless you are a veryunique individual) that money starts flowing out.

Putting together your individualized budget puts you in the driver seat of what’s happening with your money.

How to Create a Budget : The Steps in Budget Preparation

Before we jump right into setting everything up, please know that a budget is incredibly individual and what works for some will not work for all and there are multiple different budgeting methods.

Some people will use incredibly specific detailed categories. That doesn’t work for me. I kept getting frustrated and bailing on tracking expenses because I was making it too difficult for myself. Once I stopped tracking “cleaning supplies”, “paper products”, and “groceries” all separately and just name it “consumables”. I was a much happier budgeter.

Some people need those very specific categories. Some people get there through fine-tuning.

Please take this beginners budgeting step-by-step guide of what to do and figure out what works for you. The goal is to simplify the process enough that you will stick with it!

How to Make a Personal Budget in Excel

One of the absolute easiest ways to prepare to make a budget is to make a simple budgeting template in Excel. Excel is great because it allows you to:

Organize all your information.
It’s customizable
It’s very user-friendly
There are tons of Youtube tutorials for those who want to up their Excel game.
It’s an easy way to get a snapshot of how you’re doing.

If you’d like a free Beginning budget template of your very own, check out the one below:

[elementor-template id=”4615″]

Income

The first thing you need to do is figure out your income and expenses. What money do you have coming in and what money have you obligated.

Expenses

Next, just under the money you have coming in, write down what you need to pay.

Generally speaking, you will have three types of expenses: fixed, flexible and discretionary.

Fixed:Fixed expenses are just what they sound like, those are expenses that are a set amount and don’t change. An example would be your rent or mortgage payment.

Flexible expenses are ones that are necessary, occur regularly, but you have control overhow muchyou are spending on those expenses. An example of flexible spending would be food.

Lastly, discretionary expenses. These are expenses that youchoose.An example of discretionary spending would be Starbucks, pizza out with friends, a brand new purse.

Depending on your situation you will have your own variation, but write everything down. I like to order my expenses with my fixed first, then flexible and lastly discretionary. It makes it easier for me to cut things back if things are looking tight and I need a little more wiggle room.

For the flexible and discretionary, think about what you are typically spending and go with that for now.

Sample Budgeting Expenses

Housing:Rent/Mortgage, Property Taxes, HOA fees, Home Owners Insurance, PMI
Transportation:Car payment, Insurance, Gas, Maintenance, Registration fees, Parking fees, Train/Bus fare
Utilities:Water, Sewer, Trash, Electricity, Cable, Internet
Food:Groceries, Eating Out, Coffee shops
Clothing
Recreation:Movies, Books, Music, Vacation
Health:Health Insurances, Premiums, Medications
Personal Spending:Child care, Gym, Nails, Hair Cuts,
Savings & Debts:401K, IRA, 529, Sinking Funds, Emergency Fund, Credit Cards, Student Loans.

Balancing your Budget

Now that you’ve got the bones of your budget outlined, it’s time to see how it all comes together. Do you have more money coming in than you have going out? If so, this is great news. If not, where is it going?

Take a hard look at your numbers. Are there areas that can be cut back?

Savings

Chances are you have something, at the very least retirement, that you should be saving up for. If you’ve not started saving at all, I would encourage you to take a minute to think about what you want (or need) to save for.

Once you have an idea of what those things are, what time frame are you looking at for when those things will come due.

Once you know what and how much you need and when you need it, do the math on the money you need to set aside, weekly or monthly, to achieve those goals.

How to Stick to a Budget

The biggest struggle most people have with a budget isn’t making one– its knowing how to stick to a budget!

Once you have your budget all mapped out, I recommend you monitor your spending for a few weeks or month, depending on how you spend.

Nothing was more eye-opening for me than when I got serious about budgeting and started adding up and categorizing all my expenses.

All those little trips to Target or $7 stops for a quick lunch added up to quite a surprising sum, let me tell you!

I realized that what I thought I was spending and what I wasactuallyspending were two very different numbers!

Review Your Budget Regularly

If you’ve never budgeted before, or never followed through on budgeting before, it is a constant refining process. You are going to be tweaking categories and changing allotments till you get a good handle on your financial picture.

Inevitably something will happen– you’ll pay off a credit card, you’ll get a raise, you have a baby — and then you’ll need to rework your numbers to reflect those changes.

If you’ve never really monitored where your money goes, it will be eye-opening.

Debt

I am not going to enter into the philosophical debate (in this post- ha!) over whether or not you should have debt. I’m just going to point out that having debt is costing you money in the way of interest. So cutting down on the amount of debt you have and doing your best not to incurmoredebt would be the way to go in the interest of saving yourself money.

How Overspending Will Break Your Budget

Overspending is a common problem. So if you find yourself with an overspending problem, you are not alone!

There are many reasons why people overspend their budget.

You don’t know how much money you are actually spending, or should be spending.
You have emotional triggers that are tied to spending.
Spending electronic money (via credit or debit cards) doesn’t feel real to you.
You don’t have an accurate idea of what you actually need. Sure I could budget $20 a week for my family of 5, but that just isn’t a realistic or possible goal!

Related posts:

Cutting Expenses | How to Cut Costs to Put More Money Back in Your Budget
How to Stop Spending Money | Taking Control of Your Money
30 Days to Saving More Money

Which payment type is best if you are trying to stick to a budget?

One of my favorite budgeting methods is the Envelope System.It helps to eliminate overspending by making the switch to cash. When the cash in a certain envelope (category) is gone– there is no more cash to be spent. If you are new to the Envelope System or are looking for more information, check it out.

It is, in my opinion, one of the easiest ways to stay on budget.

You may need to experiment on what works best for you. The important takeaway is to make a budget today and keep working at it!

Beginner Budgeting Steps Round Up

So, beginner budgeter here is your action plan:

Write down all your income and expenses.
Review past and or current spending.This gives you an idea of how much you should be spending and if that’s different from what you currently are spending.
Adjust money allotted for each category accordingly.
Don’t forget your savings. Savings includes sinking and emergency funds.
Work on getting rid of debt.
Make sure you continue to track expenses as you go. Otherwise, you will have no idea if you are staying on budget.
Monthly Review. Make sure you sit down at least once a month to take a whole-picture look at how your money is working for you and redirect your course.

You’ve got this!

Budgeting isn’t hard because you can’t fill out a spreadsheet. It’s hard because it requires you to be consistent and to stick to it.

But you’ve got this! You’ve already taken the first step by investigating what and how to budget.