4 Steps to Create a Simple Budget

By: Jordan DeTar // Feb 4, 2019


“In the past 30 days, you spent $94 on coffee. Usually you spend $20.”

Budgeting – we all love to hate it. Wouldn’t it be just as effective – not to mention way easier – to just spend reasonably? Is my daily $4 Starbucks really that big of a deal? Well,  while some people may be able to spend responsibly and dodge the despised process of budgeting, most of us are not so self-disciplined. And even if you have more discipline than a world-class ballerina, you’re not immune to disaster – no one is. And that’s why budgeting is so critically important, especially for those of us who are new to this whole adulting thing.

Last October, I came across the Daily Worth’s Amanda Steinberg and her book Worth It: Your Money, Your Life, Your Terms – a book about Steinberg’s own “money story” and how women need to reclaim their finances and own their money stories because if we don’t, we’ll never get aheadHer message echoes that of Sallie Krawcheck, former Wall Street CEO turned startup founder of Ellevest – a digital investing platform made for women – who repeats again and again and again, Money is power.

At the time that I read Steinberg’s book, I was interning at a wealth management company and becoming quite obsessed with the relationship between women and money in today’s society. I became fascinated by everything from the gender pay gap, to the lack of women in finance, to the gender investing gap, and more. As I sat in the Houston airport watching my connection to San Francisco get delayed over and over and over again (I ended up sitting there for about 10 hours), I finished the book and became absolutely inspired to do something about this reoccurring societal problem in which women are hands-off when it comes to finance, both regarding the profession and their own money.

The good news is that we can break that pattern today. If you haven’t yet created a budget, now is the time. So, here’s what you need to do first:

  1. Know the 50-30-20 Rule

  2. Engage in some goal setting

  3. Download this budget spreadsheet that I’ve created.

  4. Make a Mint account (and download the app to stay on track!)

1) 50-30-20 Rule

The 50-30-20 Rule is the golden rule of budgeting. If you’ve ever read anything on personal finance, this is guaranteed to be the first thing that comes up. Essentially, it says that you should spend 50% of your after-tax income on “needs” (i.e. rent, food, medical insurance, etc.), 30% on “wants” (i.e. shopping, eating out, travel, etc.), and 20% on savings and paying off your debt. If you can follow this simple rule, you’ll be well on your way to living a financially healthy lifestyle. You’ll see in the linked monthly budget spreadsheet download that I’ve shaded the different spending categories. Neutral indicates “Needs”, Light Grey indicates “Wants”, and Dark Grey indicates “Savings + Paying off Debt.” As you enter values into the budget, the 50-30-20 table will automatically update to display your own Wants/Needs/Savings distribution.

2) Goals

Thinking about your financial goals can be daunting. For many 20-somethings, we’re not even sure what that means. However, without getting complicated, you can probably identify some of your basic goals. For example, I know that I want to be able to eat out and do fun activities on weekends, travel a few times per year, and one day retire happily (although that day will be very far from today). These goals aren’t super specific, but they were enough to get me going as I began creating a monthly budget for eating out/entertainment, starting a savings account for travel, investing some of my savings (more on that later), and contributing to my 401k. As my goals become more refined, I’ll be sure to re-evaluate my budgeting and spending.

3) Budget Spreadsheet

Once you’ve considered your goals, it’s time to make a budget. The budget sheet I created has a few key components.

Note: Only edit the table at the bottom of the page – do not touch the formulas in the Summary/50-30-20 table.

  1. Monthly Income – This is where you’ll put your monthly sources of income and how much you make. If you’re a salaried employee, just take your annual pre-tax salary and divide by 12. The important thing here is to include your pre—tax salary. Because the next section is taxes…

  2. Immediate Deductions – Here’s where you’ll want to enter your taxes. I used Smart Asset to calculate my tax deductions, and I recommend you do so, too. Be sure to set the filter to monthly to see your monthly deductions. This is also the section where you’ll want to enter any other pre-tax deductions (i.e. medical insurance, pre-tax 401k contributions, commuter plan, etc.).

  3. Monthly Expenses – This is where the budgeting comes in. For rent/utilities/wifi/etc., you just enter what your typical bills are. When you get to the food/other section, that’s where you’ll need to start doing some math. As you enter your budget, you’ll see the “cash balance” at the top of the page diminish – alerting you about how much you have left to “spend.” My biggest advice here is to be realistic. If you typically spent $50/week on groceries, don’t budget for $30/week (unless you’re planning to cut back). I would recommend that you leave the light gray shaded boxes for the end because that’s your “Wants” spending, which should be the last thing you think about.

  4. Savings – This is where your longer-term financial goals will come into play. This includes a few different sections:

    1. “Fun” Fund – As you can see, the first box is light gray (indicating “Wants”). That’s because I’ve decided to put a certain amount of money into a separate checking account each month to save for fun. This means when it’s time to buy plane tickets, book a hotel, or buy gifts, I use a different debit card that’s attached to this special checking account. This ensures that I’m budgeting for bigger purchases that don’t happen on a monthly basis, and I’m not blowing my budget while on vacation (because I’ll use my “fun” card).

    2. Savings (Emergency Fund) – My emergency fund is a separate savings account that is intended to be money used during an emergency (such as being laid off). The experts say you want to grow your emergency fund to 3-6 months’ living expenses to protect yourself from a disaster. It might seem silly, but do it. None of us are invincible.

    3. Savings (Investments) – This is the money that I’m regularly investing to grow over the next 5-10 years. This isn’t a long-term investment, but rather a more short-term one. I wrote about investing a few months ago, but due to my company’s regulations, I had to divest my money. Now, I have my money in Vanguard ETFs – which I’ll write more about later.

    4. Retirement (Post-tax) – Post-tax Retirement contributions usually come in the form of a Roth account. I’m not going to get into the specifics of this now, but check out this NerdWallet article if you’re interested in a Roth 401k.

Together, these 4 sections feed into the summary, charts, and 50-30-20 table near the top of the page. As you adjust the amounts, you should see the charts/tables change, as well. Now that you’ve made a budget, it’s time to keep yourself accountable.

Exclusive: Download our Personal Budgeting Spreadsheet. Why start from scratch? We created this budgeting spreadsheet so you can get ahead of your expenses and follow a personalized budget. Let's do this together.

4) Mint

Mint has honestly been such a saving grace as a new young professional. After you link your bank accounts to the app, you’ll want to set your monthly budget based on various spending categories (i.e. rent, Internet, groceries, gym, etc.) and voila – you’re ready to go. The app will automatically sort your spending into categories as transactions are made, keeping live updates of your balances. I’d recommend reviewing their categorizations of your spending at least once per week, because it’s definitely not foolproof, so you’ll probably need to adjust a few. Overall, it’s fantastic, and it allows you to see where your money is going and whether or not you’re on track. If you noticed the quotation at the beginning, Mint tends to send you warnings when you go over budget. It’s not uncommon to receive an influx of messages warning you about spending more than usual on Starbucks, or maxing out your clothing budget for the month. Although those messages can be annoying, they’re what you need to stay on target!

Money is power.

I’ve said this before, but I am definitely not a financial expert. I’m just a new young professional trying to navigate my way through adult life, and hopefully help some others along the way. Women have been left out of the money conversations since forever, and it’s time that we change that. The stereotype that men make the money and the women spend it is not only outdated, it’s outright wrong. Money is power, and budgeting is the first step to building your base.




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