Budgeting Saving

Building Up a Budget that Matches Your Needs

Eric Rosenberg
Written by Eric Rosenberg

Budgeting is a fundamental personal finance skill, but one that many people lack. Even worse, some people get upset, nervous, or feel controlled when budgeting comes up in conversation. Today, we are going to turn those misconceptions upside down as we build up a budget that matches your unique needs.

We will look in every nook and cranny of your money, so get your bank statements or your favorite budgeting app ready. Clear off a few minutes from your calendar, because at the end of this article, you should have a working budget that you can actually stick with for months and years to come.

Review recurring expenses

Start with a blank spreadsheet or sign in to your favorite budgeting app, or sign up if you don’t have one already. There are many great, free budgeting apps available today including Clarity Money, Mint, Personal Capital, You Need a Budget (YNAB) and others.

To start your budget, we are going to look at what you are already spending today instead of making up numbers for what you think you should spend. Fill in the categories based on your actual spending last month.

Whether you are making a spreadsheet or using an app, first focus on your recurring expenses. Consider things like mortgage or rent, insurance, utility bills, and other recurring costs. You are going to have these every single month, so it is important to give them special attention. Every dollar you save here is $12 per year, not just $1, so this is a major focus area for budgeting.

Find non-recurring needs

Next, go through last month’s statements and receipts to find any needs you have on a monthly basis but are not recurring bills. This usually includes things like groceries and gas and occasional but required purchases like clothing, doctor’s appointments, and medications.

These are expenses you will have whether you want them or not, so you have to budget for them. After all, you have to eat when you’re hungry and go to the doctor when you are sick, those are not choices.

You do have choices on how you spend in these categories, but they are required categories overall. For example, you can choose to buy store brand mac and cheese instead of the name brand stuff to save money, among other products.

Remember that we are not making changes to your target budget yet. We are just listing your spending for the last month by category with as much detail as makes sense for your spending.

List out reasonable and affordable wants

If you went to the coffee shop twice a week last month and spent $4 each time, you should put $32 in your budget for coffee. Even though you might think you can’t live without coffee, that one falls squarely in the “wants” column, it is not a need.

Any other spending you have that you could reasonably live without should go into this category. This includes any wants and things you can viably survive without. Hobbies often wind up on the expense chopping block, as they are definitely wants.

About the author

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a finance, travel, and technology writer originally from Denver, Colorado living in Ventura, California. When away from the keyboard, Eric he enjoys exploring the world, flying small airplanes, discovering new craft beers, and spending time with his wife and baby girl. You can connect with him at his own finance blog Personal Profitability.

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