Day 13: Putting Together a Budget is Easy!
by Edward Smith
18 Jul 2020
How to Set Up A Budget
In my last article entitled 🤠How to Stop From Being Surprise Attacked! you discovered that budgets are super important to have. All people that work and earn a paycheck should have one.
The problem with budgets, is that not everyone is taught how to make one.
When asked, many people refuse to talk about budgets, because budgets can be seen as constraining or binding.
Coincidentally, many of these same people usually don't have a budget themselves, and don't really know what they're talking about. What a shame. They, like you, probably would benefit from having one.
So knowing all of this. What the heck is a person supposed to do? Don't worry. It's easy. I'll walk you through it.
Lesson 1: Get a Job!
Budgets work best if you have money coming in. Start by looking at your paycheck. On every paycheck, you'll find a location on it that lists out your net take home pay. This is the money you get to actually keep. It is what you make after you pay for everything else (i.e. taxes, government programs, and insurance).
Here is an example paycheck stub that I pulled from a website called https://formswift.com/pay-stub
At the bottom with the red arrow you'll see a number called Net Pay. That's the thing you want to know. Once you know your net pay amount, you'll need to know how often you get paid. Some folks get paid every week, others get paid bi-weekly. Maybe you're none of the above.
If you look into it, you might find out you're one of those rare folks that gets paid monthly or even less often. That's okay. We can make this work no matter what. It's like G.I. Joe. Knowing is half the battle. Go Joe!
Since most budgets are done monthly, find out how often you get paid and then multiply your net income by the number of times you expect to get paid that month. For instance, if you make $1,000 a week and there are 4 weeks in that month, you'd start with $4,000. If that month is longer and there are five weeks you'd start with $5,000. Budgets can change from month to month.
For those that get paid every couple of months (seasonal contracts and the like), split your net income number from the really big paycheck into smaller pieces, so that each piece covers a single month of time. For example, if you make $6,000 every 6 months. You'd divide $6,000 by 6 and end up with $1,000 as your starting number.
Now to Figure out Where That Money is Going
Now it's time to leave the safety of your home and count all of the cows outside. List out all of your expenses and then give them a dollar amount (the amount you expect to pay for each of them).
For example, you might list out electricity, water, gas, groceries, pet supplies, birthday gift for mom, lunch date with friend, etc etc. Some of these expenses are vital and come up every single month and must happen.
Other expenses may be trivial or situational. They may only come up during the month you're looking at right now, and you'll have to figure out whether they need to happen or if they're just a want.
The important thing here is list them all out. Leave no expense behind. You can't ignore any of them, because at the end of the day, your bank account is still going to get hit by them. Put them out there for scrutiny. You need to deal with each one of them. Every one of them.
Here is an example of a budget template I found online at
The point with budgets is you want to see everything out in the open, and you want to know what everything is going to cost. Some of these expenses will be easy to calculate because you have bills and the bills tell you exactly how much you owe. Other expenses will require review and analysis.
You know you could spend all of your money on that lunch date with your friend, but who are you trying to impress here? Maybe it would be smarter if you set a limit and stay under it.
It's funny. When you decide you only have fifty bucks to do something, you tend to only spend that much. It's like you don't have more then that, so you have to stop when you get to that point. Budgets can be really cool that way.
Put the dollar amount down that you really want to pay and only pay that much. You're not a victim. You're running your own show. Set your own numbers and limits, and then stay within them. That's how you protect yourself from you.
I recommend going with a zero dollar budget. This means that you assign every single dollar of your net pay to something within your budget. Your pay minus all your expenses and future goals equals zero.
Setting up a budget might sound boring at first, but it starts to become really fun and empowering. Don't rely on others to know what is going on in your life. Be proactive. Find out what is going on yourself! Create a Budget!
Truth in Advertising
Having used a budget myself I can speak from experience. When I want something that I can't afford, sticking to a budget sometimes feels like it goes against my nature. I've messed it up before, and my nature is to want to mess it up again. Sometimes I want to be a kid, and the budget is reminding me to be an adult. I sometimes resist it.
That's why I'm doing this challenge. I'm forcing myself to get back on track with a program that I already know works and that has benefited me in so many ways. I want to help the budget do it's job, and I want to put it back to work.
That being said, I know it can be super hard to behave and help the budget do that.
I promise you though, living within a budget is totally worth your time. You'll be surprised by what happens. You'll find your family has your back, and that they want to work with you, not against you.
You'll find extra money in unexpected places. You'll learn how to become resourceful, and creative. You'll also learn you make good decisions when you choose to, and that you can trust your own judgement. Budgets work. Create one today!
If you like this article and want to know what to do next, check out my next article. I'll tell you what to do if you don't think you have enough, and I'll tell you what to do if you have left over money to work with.
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