The basics of budgeting

how to save money every month budgeting

What is budgeting? Most people don’t know because they don’t do it. Budgeting is, in essence, preparing a plan to use your money. It’s knowing what you have money for and what you don’t.  It’s putting aside money for that rainy day when your car breaks down and you need to fork over hundreds to the mechanic.


By budgeting, one can stay out of debt or get out of debt. In fact, 4 in 10 millennials are overwhelmed by debt, with a whopping 56% of them living paycheck to paycheck, according to a recent study done by Wells Fargo.  A lot of millennials feel so inundated with financial burden that budgeting is the least of their worries, but it’s a must.

The basics of budgeting

If you are one of the born-after-1980 millennials not quite reaching your career and financial goals, tune in to these five budgeting basics to help get you where you want to go.  With the use of a Google Drive Spreadsheet, create and fill fields accordingly based on the below instructions as we go into the basics of budgeting.


Soul Searching

Millennials are labeled alternately as lazy, underemployed, debt-laden but also smart, savvy consumers whose laid back priorities may be what this country needs to get its national budget on track. Yet, everyone behaves in ways that sabotage achieving their dreams, whether it’s leasing a car too expensive to pay and afford or spending an excessive amount of money at a bar. Priorities and necessities need to be ironed out before any budget can be written down. A closer look at spending and saving attitudes, habits and what drives them is a good first step toward writing a budget you can live with. It has to be an honest analysis of your life, what you’re willing to live with or without.  If you are lying to yourself, your budget is destined to fail.


Second Nature Budgeting

Still living with parents? Start with where your current income and expenses are, or plug in spaces for responsibilities that people living independently must meet. Either way, having a written budget gets you practice forming the financial habits you need to cultivate as second nature. Common items in budgets are:


  • Savings – 70 percent of millennials begin saving at the age of 22: emergency fund equaling three to eighteen months’ gross salary, short and long term savings accounts, medical savings account, CDs, retirement funds, other investments

  • Income – Primary income, additional earned income


Tip: List alimony and child support under income or expenses as applicable.


  • Household expenses – groceries, vitamins, hygiene products, cleaning products, pest control, home and automobile maintenance, entertainment, gifts, postage, school supplies, babysitting

  • Utilities – electric, gas, water, garbage, telephones, ISP, cable

  • Transportation – gas, carpooling, fares and gratuity, parking or garage fees

  • Debts – revolving credit cards, installment loans: auto, education, furniture


Tip: Unused credit limits are considered a liability when applying for funding. Close accounts you don’t use or get the limits lowered.


  • Insurance – life, vehicles, rental, property, medical

  • Medical expenses – office visits, co-pays, deductibles, OTC drugs, prescriptions, supplies, equipment

  • Personal expenses – clothing, haircuts, massage, dry cleaning


Tip: If you budget based on gross pay, then list all payroll deducted items under expenses.


Tip: If you list net income, then you could list the payroll deducted expenses, but leave their figures blank.


Spot Hidden, Irregular, and Periodic also known as SHIP Expenses and Income.

Omitting or adding hidden and irregular expenses and income from your budget can wreck it or balance it better. Include them as separate rows on your worksheet. Some examples are:


  • SHIP Expenses like oil changes, termite renewals, auto safety inspections, driver license and registration renewals, school field trips, subscriptions, union and professional dues, home and auto repairs, property taxes, and drive-thru coffee.

  • SHIP Income like tips, bonuses, income tax refunds, reimbursement for medical expenses, structured settlement payments, indemnity benefits, gifts, lottery winnings, interest and dividends only if you draw instead of reinvest

basics of budgeting

Customize your budget.

Allowances toward financial goals can be added to mirror your thinking process. Do you add up or count down when you calculate, for example? Consider setting aside savings for expenses like a car, home, or dream vacation by adding a line item with the projected amount you will spend, and subtracting savings you set aside as you work toward that goal. Forecasting your budget for the future (however long) can help you plan for that next big expense, just remember to treat future purchases as current expenses as you continue to save.


Online tools invigorate the budgeting process.

Wouldn’t it be nice to have an on-call life planning guide and financial planning workspace for every stage of your life? Well, if you haven’t heard, the Mint’s free, user-friendly, interactive website makes the budgeting process more fun and a lot easier to track. It’s free to sign up for and connects all your credit cards, bank, and other finances making it an easy to use tracking tool.  The budget section already breaks down the most commonly tracked fields and shows how much you spend accordingly.  You can set budget goals and also set alerts and notifications when you are about to go over.  It’s a powerful tool that will help you the more you use it.



Review and regroup your budget and life plan weekly the first three months, monthly for the remainder of the first year, then bi-annually or annually thereafter. Track, chart, and celebrate your progress. Relax, knowing your best laid plans are in a forward motion.


Jason Kane is a professional blogger who focuses on personal finance and other money matters. He currently writes for, a leading supplier of personal and business checks.


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