Let’s talk about budgeting without turning you into a money-obsessed Scrooge, alright?

Step 1: Face Reality

Before we dive into the numbers, let’s face the hard truth about your finances. Look, nobody taught you this stuff, so don’t beat yourself up. Close your eyes, take a deep breath and let’s start fresh.

Now, gather all your financial info like bank statements, credit card bills, and pay stubs. Embrace the reality of your money situation, whether it’s good, bad, or downright terrifying. It might feel like looking into a funhouse mirror, but understanding where you stand is key.

Step 2: Show Me the Money!

Now that you’re ready to face reality, let’s dig deeper. Make a list of all your income sources. It could be your paycheck, side gigs, or even the loose change you find under your couch cushions (we’ll talk about saving spare change in a later post). This list will give you a clear picture of how much you’re bringing in.

Next, list out all your expenses. I mean everything! Start with the must-haves like rent and groceries, but don’t forget those sneaky impulse buys that add up. Take a close look at every charge on your credit card statements. Yeah, it’s tough, but this exercise helps you see where your money goes and where you can improve. Please stop crying. This is good for you, I promise.

Step 3: Prioritize Like a Boss

Now, it’s time to prioritize your expenses. Focus on the essentials—the things you need to survive, like food, shelter, and Netflix (we all need some entertainment). After you’ve set money aside for those, take a hard look at the rest. Ask yourself if you really need that fifth subscription box or if that cash could go toward paying off your student loans. Be ruthless, but also realistic. You deserve some guilty pleasures too, because life without any indulgence is like eating a salad without dressing—bland and unsatisfying.

Step 4: Do the Math

Now, here comes the moment of truth—math. Calculate the difference between your total income and expenses. If it’s positive, celebrate! You’re on the right track. But if you’re in the red, it’s time to take action and make adjustments. This is where budgeting works its magic. Look for areas where you can cut back. Can you make your own coffee instead of hitting up expensive cafes? How about meal prepping instead of ordering takeout every night? Remember, even small changes add up and turn that negative number around.

Step 5: Budgeting Like a Hawk

Budgeting isn’t a “set it and forget it” thing. You gotta keep an eye on your spending habits. Embrace technology and use budgeting apps to track your expenses in real time (future post about this coming real soon). Before swiping that credit card for something outside your budget, pause and ask yourself, “Do I really need this?” By becoming your own superhero and saving the day from unnecessary expenses, you’ll make great progress toward your financial goals.

Step 6: Budgeting for the Unexpected

Life is full of surprises, like a rollercoaster ride with twists and turns. That’s why flexibility is key in your budget. Unexpected expenses pop up like dandelions in spring. To be ready for these rainy days, build an emergency fund (we’ll cover this soon). It’s your safety net, giving you peace of mind and stability when life throws curveballs.

Remember, budgeting doesn’t have to be soul-crushing. It’s a powerful tool that lets you take control of your finances while still enjoying life. So put on your budgeting hat, grab those number-crunching pencils, and get ready to make intentional choices that align with your goals and dreams.

If you’d like a simple spreadsheet to make budgeting a breeze, click here (if you don’t have Microsoft Excel on your computer, just upload it to Google Drive) . Don’t worry, with the right approach, you’ve got this!

– Irene