(9 minute read)

The first time I sat down and considered building a budget, I was stumped. I had no idea where to start, what should be on it, and frankly, how it was going to help me. It also felt like a project I was going to fail, a plan I was never going to execute, and a road I didn’t want to be on. But I was in debt, A LOT of debt, and I needed a way out of it. Despite my skepticism, I knew I needed a plan, and so I built my first budget. 

My first budget was an utter disaster. I estimated all my budget categories incorrectly, I forgot about 40 things I had to pay for in a month, and I really didn’t know how to keep myself from overspending. But I kept at it. Month after month, I got better at identifying how much each category really should be, found ways to reduce my spending, and the longer I did it, the more addicted I got to keep my spending within my budget. 

If you’re struggling to build a budget and stick with it, man, do I feel ya! I’ve been there, so let me share my tips on not only how to build a budget but also how to stick with it for the long haul. 

Just do it 

The best, fastest, and easiest way to build a budget is to simply sit down and do it. Your first budget doesn’t have to be perfect. Hell, it doesn’t even need to be 100% accurate. Your goal is to simply get as much you can think of down on paper and then arrange it into categories so you can start mapping out your plan. If you are writing this down where you live, start by looking around wherever you are sitting right now. What is your rent or mortgage? Do you pay for your electricity? What about the water you run through your sink? Do you have a trash removal fee you pay every month? Looking around in your environment will give you a good headstart on identifying what items you pay for, and subsequently, what things should make their way into your budget. 

Then think about what you spent today and this week. Did you go out to eat? Did you buy groceries? Did a bill come due that you had to pay? Working little by little like this, you’ll eventually capture just about everything you spent in a given month.

If you still feel stumped or want a little help with this, check out my worksheet 101 questions you can ask yourself to help you build a budget. Don’t be overwhelmed by the number! It is a bunch of yes/ no questions that will help clarify where you spend money and what should be on your budget. 

Write it ALL down

I think the biggest mistake I made when I wrote my first budget was not writing down everything I was spending. Because once you write everything down, it has a tendency to feel very real at that point. And sometimes reality is hard to face. So it took me a little while to get rid of all the shame and guilt I had around being in debt. At first, I fudged it. If I bought a coffee at Starbucks, I wouldn’t write it down because I felt guilty about being in debt and buying expensive coffee. It seemed like a luxury I couldn’t afford, so I thought if I don’t write it down, it’s like it didn’t happen. The funny thing about that is it definitely happens to your bank account whether you write it down or not, haha. 

I can’t promise you’ll do away with all your feeling surrounding your debt and money overnight. But I can promise if you write everything down, you’ll be able to build a better budget and a better plan to help you get out of debt. If the dollar values cause you to have a minor heart attack and is keeping you from building a budget, try this handy little game instead. Get a stack of notecards and write down EVERY item you purchase throughout the month. Use one card per item and write what the item was on the front of the card, and the amount it cost you on the back. Then at the end of the month, spread everything out on the floor. 

Once you see how everything is laid out, start to make some buckets. For example, if you purchased paper towels on a trip to Target and light bulbs later in the month when you were at Home Depot, you might make a bucket says “Stuff for the house.” When you’ve organized all your items into buckets, identify how to group those buckets into categories. Then write it all down on a piece of paper. 

Next, you’ll need to determine how much to allocate to each bucket. The best way to do that is to use existing spending to establish an estimate of how much you might need for each category. To identify how much you spent in each bucket, flip over each card, and add up the total. Start by simply recording how much you spent across each category. Then subtract everything you spent in a given month from your total income. Did you spend more than you make? Now you have a chance to review your categories and see where you can cut back, so your income minus your spending equals zero every month. Don’t focus too much on savings goals or paying off debt with your first budget. Make sure if you have debt that your minimum or monthly payments are included in what you need to spend each month, but for your first budget shoot to make your income minus your expenses equal zero. 

Now you should have a month’s budget laid out on a piece of paper segregated by categories, broken down into buckets, and itemized spending underneath. And you should have a total number that you spent in each of those buckets, which gives you a good idea of how to estimate how much you should budget for each bucket each month. If it doesn’t add up to zero, review each bucket, and determine if you can reasonably scale back on your spending so your income minus your expenses equal zero every month. You’ve just built your first budget!

Develop some staying power

When you break down the 5 (now almost 6 years) that I’ve been budgeting, it shakes out to 70 months. I’ve repeated this same exercise 70 times across 5+ years and been mindful of my spending for 2098 days. Damn, it sounds like a lot when you put it that way! And I’ve been asked before, how do you do it? How do you make a conscious decision every day to cross-check your budget with everything you spend, write everything down, review, and re-review multiple times a month, and do it all over again the next month? Doesn’t it get exhausting? Doesn’t it feel like you’ve locked yourself in some kind of money prison? 

Truthfully, not at all. When I started budgeting, I found the happiness and peace that I had been missing when I was in debt and had no idea how to get out of it. Debt felt exhausting. Debt felt like I was locked in a money prison. But building and working the plan to get out of debt, building a budget to help me get there, THAT felt like freedom. So the reason I build the budget every month and track everything I spend is that, without it, I’d be wandering around some money desert somewhere completely lost, lonely, and sad. 

So beyond the amazing feeling it gives you to finally see the light at the end of the tunnel, there are 5 motivational tips I’ve picked up along the way that have helped me stay the course. 

  1. Set a goal to work towards. Maybe your goal is to save $1000 into an emergency fund or buy yourself a new washing machine. Whatever it is, set a goal and identify what it will take for you to get there. 
  2. Give yourself a miscellaneous category on your budget. Despite our best-laid plans, sometimes everything we buy just doesn’t fit into every category and bucket we can think of. Every month I budget $75 to a “miscellaneous” bucket, and for 70 months running, there has been something I have recorded in it. It helps take the stress off having to estimate down to the penny every bucket I have on my budget. It’s the mulligan you give yourself every month. 
  3. Make budgeting a team sport. Do you live with a roommate, have children, or a significant other? Get them involved in the budget! When you budget together, you develop a network of support that can help you when it feels tough to keep going. Have everyone participate in developing the group’s financial goals so everyone will feel ownership and dedication to stay the course. Beyond budgeting with others, tell your friends and family what you are doing. Encourage your friends to come up with non-spend activities you can do together or ask your family to find a new way to celebrate a holiday that doesn’t involve buying gifts. The more people you surround yourself who understand the path you are on, and the goals you have, the more support you will have to help you get there.  
  4. Identify one thing on your budget you will not give up. Too often, in our quest to get out of debt, we give up something we truly love that brings us happiness because it “isn’t in the budget.” I say fuck that. You’ll never stick to your budget if you feel like it forced you to give up the things that make you happy. I’m not saying you won’t have to make sacrifices. But identify the one thing you spend your money on that makes you happy to have it and keep it there. It might be streaming Netflix after a long day at work, having a nice bottle of wine in the house for a Friday night gathering with your neighbors, or making sure you have a new top every month you can wear on your company zoom calls. Whatever it is, make a non-negotiable item a staple on your budget, and you’ll feel like you have more while you spend less. 
  5. Document your milestones. Nothing keeps you working a plan more than seeing your progress over time. Keep a journal or a piece of paper where you write down the financial milestones you hit. And you can establish anything as a milestone. Did you write your first budget ever? Write it down! Did you not overspend in a month? Write it down! Did you finally pay off a credit card? Write it down! Seeing all these milestones add up will fuel you to keep going and give you the motivation you need to stay on your debt payoff journey. 

I hope this helped you realize that you can build a budget, and you absolutely can stick with it. Deciding to take control of your finances is no small thing, so celebrate that you decided to do so! Once you’ve written your first budget, write down that you achieved that milestone, and set yourself a financial goal. Surround yourself with a support network, make sure to have one non-negotiable on your budget, and give yourself a miscellaneous category to set yourself up for success. 

As always, I hope you are staying healthy and happy!

Xoxo, 

Amy