A Breakdown to Budgeting

After graduating from college, I realized that I had no idea how to handle my money. I was an English major and music minor, and the only math course I took was Calculus II. Accounting was not on my list of skills!

Figuring out how to start saving money and where to budget when necessary took me a lot longer than I expected, but now that I’ve been tracking my spending for a while, I believe that I have some good tips for anyone who’s just starting out with a budgeting plan.

Here’s a short guide on how to create a simple budget for yourself!

1. Calculate your monthly income.

The first step is to figure out how much money you make in a month.

There are several different ways to do this, but it all depends on your hourly wage and if you work full-time or part-time. The calculation can also be different if you have a salaried job.

If you are a full-time employee who’s hourly rate is $9/hour, then you would make approximately $1,440 a month. How did I get here?

Well, the average full-time work week is 40 hours. Take the $9 and multiply it by 40, that gives you your average income for the week. Multiply that by 4 (4 weeks in a month) and you get your average monthly income!

If you work part-time, figure out what your average work time in a week is and multiply your wage by that, then again by 4 to get your monthly income. If you work a salaried job, take your yearly salary and divide it by 12 to get your average monthly income.

2. Assess your fixed expenses.

Next step is to figure out which expenses you pay routinely every month.

These expenses are normally rent, utilities, WiFi, groceries, car payments, credit card bills or student loans.

These are things that you pay every month that you will need to budget for as they are necessary for living/to pay. Figure out the average for each category and make a list of those expenses.

3. Assess any discretionary expenses.

After you figure out which expenses are necessary, it’s time to find the expenses that aren’t as important.

These can be things like clothes, dining out, personal care, entertainment or vacation. If it’s not something that you need to pay on a monthly basis, it goes in this category.

A lot of times this is where new budgeters find out where their money is really going. Again, estimate the average you spend for each category and add it to your list of expenses.

4. Assess your savings.

If you have any financial goals such as buying a new laptop, adding to your savings every month or saving up for a big trip, make a note of them.

Decide how much you need to save monthly in order to reach that goal and add it as an expense. In fact, this step and step 3 can be interchangeable.

If your current financial goal is more important than your discretionary expenses (such as buying a new home), give it priority over the expenses that you can live without.

Which step comes first in your budgeting plan is up to you!

5. Subtract expenses from your income.

Once you’ve figured out your expenses, subtract them from your monthly income.

If the number you get is positive, you’re making more money than you’re spending, which is great! If it comes out negative, you’re spending more money than you’re making. If that’s the case, it’s time to reevaluate where your money is going and start budgeting your discretionary expenses.

Perhaps it’s time to start bringing lunches to work rather than going out to eat, or maybe it’s limiting yourself to one new video game a month rather than three or four.

Either way, you’ll be a lot happier when you know where your money is going and that you’re spending it wisely!


If you’re anything like me and you work better with a visual aid, here’s an Excel template that helps you make a budget. It even shows you graphs and pie charts to help you understand where your money is going!


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.