How to Start a Monthly Budget

How to Start a Monthly Budget


The importance of a budget is something you’ve heard me talk about over and over and OVER again, but I realized that for a lot of people, the biggest hurdle is just getting started! Don’t feel bad- this can really be overwhelming if you’re not sure where to begin. So this week, I wanted to talk about how to actually start your budget… what to gather, future savings, and future investing  all with the goal of sustainable home ownership

So budgeting… I struggle too. But I’ve learned that if you get into the habit of budgeting, it becomes the foundation for a solid financial future. But I think it’s really important to clarify what a budget actually is. Budgets are often mistaken for just a list of bills… nope. That’s not it! That has something to do with it, but a real budget is actually a limitation on the amount of money that you will spend in a period of time. For our purposes, we’re going to talk about a monthly budget. 

Where do we begin? Get a baseline of your actual spending. And I mean EVERYTHING. Let’s figure out what you have been spending money on so we can determine where we can maximize cashflow. 

First things first- We want to get three months of spending on paper. When looking at your spending it’s important to look at ALL accounts. So for example, if you are married and you and your spouse have both joining and separate accounts, you should be looking at spending in each of those accounts.  (And by the way, if you want to hear more about how my husband and I talk about money in our family, check out this video)

Once you have three months of spending down on paper, categorize each expenditure into the following categories:

SURVIVAL- housing, food, transportation, utilities, medical bills, child support.  Any mandatory minimum payments that you have to make. This does NOT include personal hygiene spends, or recreational activities.

MAINTENANCE- These are expenditures for maintenance (including healthcare) for your big assets like your car and your house, and then also your children, pets, family and self.

LIFESTYLE- This where you categorize things like pedicures, golf, going out to eat, entertainment, etc. Anything that is not absolutely vital to your literal survival, but is something you spent money on.  

GIVING- I’m a big believer in giving back, so for me, any sustainable budget needs to include a category for charity and giving back.

So keep in mind when you’re categorizing things between lifestyle and survival, things like eating out are lifestyle expenses. Going to the grocery store is survival. So if unsure if which category something fits into, ask yourself the basic question- do I literally need to spend this money for food, shelter, transportation to work, etc? If yes, survival. If no, lifestyle. 


A Successful budget is about 70% of net take home income. The remaining 30% then goes to paying off debt, saving, and investing. But I realize that if you are just starting out with the concept of budgeting, living off that 70% might be daunting. So let’s look at some of the ways to get you there.  

1- Decrease liabilities – The very first step is to take all that work you did above (categorizing three months of expenses) and determining which of those expenses you can reduce or eliminate. 

This might mean sacrifices… things like moving in with family, getting a less expensive car, etc. But those tough choices now will help you in the long run if it means that you can pay off debt, save, and hopefully even invest! 


2- Evaluate assets – If you’ve already taken step 1, and still have too much debt to overcome, it’s time to start looking around to see what kind of assets you might be able to sell to get rid of some of this debt. Things like jewelry, instruments, art, old laptops, phones, clothes… maybe you have a storage space with old furniture, or recreational toys… items that you don’t need or use on a regular basis. 

I know this can be a pain point- trust me, I’ve been there. I personally have gotten myself into a ton of debt before, and had to make sacrifices like this. But because of this, I know it can be done, and I’ve personally seen the benefit.


3- Increasing income – When it comes to your 9 to 5, it’s worth seeing if you earn more money. How do you do this? The first thing you want to do is determine if you are a valuable asset or a liability as an employee. Hint: liabilities don’t usually get raises.  Figure out where you can add value, and then negotiate a work for commission compensation for that added value. 

If that’s not possible, do additional earned income work- babysitting, grocery shopping, graphics, etc. Anything you can do with your own talents that you can offer as a service or product, you should! Or, if you have the time to take an additional job doing part time work at a grocery or delivery service, it’s well worth it if it will get you closer to that 70%. 

I know these steps aren’t easy. It takes serious commitment and sacrifice to reach these goals, but I KNOW you can do it. I did it too, and the results in my own life are beyond anything I ever expected. 

And I want to leave you with this tidbit: The most impactful thing I have learned about investing and money is that: If invested properly, (somewhere between every 4-6%) money doubles every 10 years. DOUBLES. Every TEN years. 

So I hope this inspires you, I hope it helps you, and if you have any questions and/or want to join me on this journey, be sure to join our SMART Steps community on Facebook! 


Stay healthy & stay well!