Budgeting 101

Creating a budget isn’t about restricting your spending. It’s about understanding your habits and taking control of your money. When you know where your money goes, you can make more intentional choices that align with your goals. 

The first step is awareness. Track your expenses for at least one week, but ideally a full month. Use a budgeting app, spreadsheet, or even a notebook—whatever makes it easiest for you to stay consistent. Write down every expense, from your morning coffee to your streaming subscriptions. Once you see your full spending picture, group your expenses into categories like needs, wants, and savings. 

From there, choose a budgeting method that fits your personality and lifestyle. There’s no one-size-fits-all approach, so here are a few popular options: 

The 50/30/20 Method

• How it works: Divide your after-tax income into 50% for needs (like housing, groceries, and utilities), 30% for wants (like dining out or entertainment), and 20% for savings or debt repayment. 
• Why it works: It’s flexible, simple, and great for people new to budgeting who want a broad framework. 
• Tips to use it well: Review your percentages every few months. Life changes and your budget should too. If your needs are higher right now, adjust and rebalance later. 

Zero-Based Budgeting

• How it works: Every dollar you earn gets a specific job, whether it’s covering bills, savings, or fun money. Your income minus your expenses should equal zero by the end of the month. 
• Why it works: It helps ensure nothing falls through the cracks and encourages accountability. 
• Tips to use it well: Start by listing your recurring expenses, then assign remaining money to goals. This system works best if you review your budget weekly and adjust for upcoming expenses. 

Pay Yourself First

• How it works: Instead of saving whatever’s left at the end of the month, you prioritize savings first. As soon as your paycheck hits, transfer a set amount into savings before paying other bills. 
• Why it works: It makes saving automatic, so you’re building financial security without overthinking it. 
• Tips to use it well: Set up automatic transfers to your savings account and increase the amount whenever your income grows. 

Envelope Method (or Digital Envelope Method)

• How it works: Traditionally, this involves setting cash aside in labeled envelopes for different spending categories (like groceries or dining). Once an envelope is empty, that’s it until next month. Digitally, you can replicate this by using separate accounts and naming them accordingly or tracking categories within an app. 
• Why it works: It’s tangible and helps prevent overspending. 
• Tips to use it well: Review your spending patterns each month and adjust your “envelopes” as needed. 

No matter which method you choose, the most important part is consistency. Check in weekly, celebrate small wins, and give yourself grace if things don’t go perfectly. Progress is more important than perfection. 

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