Basics of Budgeting

This post may contain affiliate links which help me keep the site running. All opinions and recommendations are 100% mine. I never recommend something I haven't tried and used myself.


I am a natural born saver. I was always the kid who had Halloween candy left over months after the holiday. Once I got a job, my parents would borrow money from me so they didn’t have to make a trip to the ATM. So, it’s obvious to assume that I enjoy budgeting, and you would be correct. But I know not everyone does. Some of us are savers and some of us are spenders. So how do you get a spender on board with a saver to make a plan that works for everyone?


Change Your Thoughts, Change Your Behaviors

One of the easiest methods is simply psychological. It’s all about perception and semantics. A budget is simply a plan for your money. It’s not meant to be a straight jacket restricting your freedom. Call it a spending plan. Call it your money map. Call it whatever you like, just sit down once a month and tell your money where to go.

One of my favorite money lessons I learned in high school was from a history teacher. He asked our class what we were going to work for someday. Were we going to work to get a lot of money? We all looked at him confused. What else did people work for? Of course, we were going to work for money!

No. None of us actually works for money he said. Rather we work for all the things we want to buy with that money. I work to feed my family, keep a roof over their head and make memories with them on unforgettable vacations.

I don’t go to work every day because I love collecting piles of money to hold or jump in (maybe I would if I actually had enough to do that, who knows?!). I work because that money works for me when I tell it where to go. That’s all a budget is—direction for your money. If it doesn’t have a direction, you will feel as though it’s slipping away from you. It will disappear in all those little transactions you take for granted every day. You know, the ones you think don’t really affect your bottom line so you refuse to cut them out? The ones you think you can afford simply because you have the cash on hand to cover them. They’ll add up and before you know it, the end of the month comes and once again you’ve saved nothing and haven’t made a dent in your debt.


Start Tracking, Baby!

A spending plan shows your monthly expected income minus all your monthly expenses, both fixed and variable. Make sure you know how much you spend on your mortgage or rent, utilities, food, taxes, insurance, loan payments, transportation costs, etc. Having credit card or banking statements on hand can help you identify an average figure to start with. Be sure to include the money that you allocate for saving and investing as well as some spending money for each of you to use as you please.

You should aim for what is called a zero-based budget. Basically, this means every dollar you earn has a job to do so there should be none left over at the end of the month. If, after you’ve input all your expenses and your saving and investing transfers, you still have some money left over, then you need to find a place for that money to go. If you don’t, you’ll more than likely spend it on stuff.

If you haven’t ever tracked some of your variable expenses, you may be surprised to see just how much you’ve been spending. Food costs especially tend to catch people off guard. Now that we are aware of our food spending, we’ve managed to drop it from $700 a month for four people to $500 as a family of six.

Once you have your money mapped, you have to actually refer to that map. For example, set a plan for your food spending and then track it like a GPS directs you. If you plan to spend $500 a month on food, that gives you $125 a week on average. When you go to the store, only take $125 cash or charge $125 and then write it down. Only spent half? Great, write it down so you know how much you have left in case you forgot anything or need to roll that money over to the following week. Grabbed a coffee on the way into work, or snuck a pre-dinner Whopper on the way home? Write it down!

Doing the monthly budget makes me think of the Voya commercial with the squirrels and the orange money. Wouldn’t life be so much easier if our money was color coded for our needs? Your orange money is for retirement, red money for mortgage/rent, blue money for food, green for spending cash, etc? Obviously, that’s not possible, but your budget is essentially doing that for you. It’s telling you that the money you carry in your pocket may not actually be meant for your daily Starbuck’s habit.

Dave Ramsey recommends using all cash and an envelope system to track spending. You fill up your variable spending envelopes every payday so you can’t go over budget. If you need more money in one envelope before the next paycheck comes, you’ll have to move it and spend less from another envelope. Pretty easy system that definitely works, but I’m not a fan of cash personally.

I try to never pass up free money. And my credit cards offer me free money in the form of cash back rewards to use them. Dave posits that even if you pay off your balance in full each month, you’re still better off with cash because you don’t have a psychological connection with your spending when you use a card and you’re more likely to spend more. I tend to agree with his assessment, but I found a way to combine his envelope system with the use of my card to fight this phenomenon.


Embrace Technology

My husband and I use the GoodBudget App (for iOS, Android and web) on our phones. The free app gives you 10 virtual envelopes to input your variable household spending. We have envelopes for food, fuel, clothing, baby needs, gifts, and miscellaneous for all those random expenses that pop up. The shared account syncs between our phones every time we enter a consumer transaction in our variable spending envelopes so the right hand always knows what the left is doing. A quick glance at the app and we know exactly how much is left in our envelopes for the month. Went over in an envelope? Just transfer some “money” from another envelope to cover it and then adjust your future spending.

I absolutely agree that once we started tracking our card charges with the app, we were more intentional about our spending and worked harder at staying within budget. Before that, our budget spreadsheet was just an Excel document I opened at the start of the month and never referred to again until the following month. The GoodBudget App was the missing link to tie it all together as a cohesive system.

So, that’s how we budget, then lather, rinse and repeat month after month!


Do you use a budget or fly by the seat of your pants? Any tips that help you stick to your budget? I would love to hear about them in the comments!

About The Author

Amy Davis

This post may contain affiliate links which help me keep the site running. All opinions and recommendations are 100% mine. I never recommend something I haven't tried and used myself.

I’m a former therapist turned stay-at-home mom sharing my tips and strategies to achieving freedom from debt. When I’m not blogging, cooking, cleaning or otherwise catering to the needs of my 4 little persons, you’ll find me binge watching Billions. #goals


  1. Sean Murray | 7th Apr 17

    I definitely agree that the cost of food in a budget can be surprising.
    I just finished reviewing my Q1 budget.
    As a college student with an essentially all-inclusive meal plan, I still spent 52% of my budget on food??
    I’m definitely planning on minimizing this cost moving forward now that I’m aware of it.

    • Amy Davis | 7th Apr 17

      Yes–if we didn’t need to eat, I dare say we could be retired by now! Haha!

      Good for you for course correcting now when you’re young. You’ll be that much farther ahead than your peers (and prob some of your elders too)!

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