I’m passionate about helping moms live life abundantly by overcoming mom burnout. While this can mean many things, living by a budget reflects a life lived with intentionality, purpose, and a focus on the important things.
Ask any of your mom friends what’s one thing they wish they could change about their life, and they would probably say something like:
feel less stressed about money
This is why I think budgeting is too important to not talk about for young families. Well, really any family, but if you’re here on my blog… I’m guessing you might be a young mom just like me (Oh heyyy!).
In this post, I simplify the budgeting process and give you all the basic tools to start budgeting.
Here’s a Free Simple Budget Template Printable to get you started! Or, if you’re looking for something more detailed and customizeable, here’s a budget spreadsheet collection for families.
There are affiliate links in this post. This means if you click on a link and make a purchase, I might receive a commission at no additional charge to you.
The Beginner’s Guide to Budgeting
While I’m not a certified financial advisor, I’m skilled at researching everything budgeting, and I’ve been doing it for the past 8 years of our marriage. Between various jobs, kids, and moving situations, we’ve had to adapt our budget A LOT to meet our family goals.
While I could throw lots of numbers at you (like paying off $90K in debt in 4 years or buying 2 cars in cash within 3 years after that), what I really want to share is the FREEDOM.
Rather than feeling restricted, which is what I thought initially, I’ve found the strange sorta freedom in budgeting.
Through budgeting, I’ve thrived with the information a budget provides for me and my fam-bam because information gives you the power to make decisions proactively rather than reactively.
Only keep reading if you want to start living life abundantly!
Before we jump in, is the Simplified Budget for Families right for your family?
What is budgeting?
Before we dive into the deets, we need to define what exactly budgeting is.
Budgeting is assigning a future task to each dollar.
There. That’s it. That simple. Done.
But seriously, the problem most people run into when it comes to budgeting is they make it too complicated.
Common Misconceptions about Budgeting:
- It’s not the right time for me.
- I’m no good at math.
- It’s too restrictive.
- I keep a budget in my head.
- I’ve gotten this far, why do I need one now.
- I only need to do a budget once.
- I already track my expenses, I don’t need a budget.
- Everyone else says I should have one, I guess I should start one?
When it comes down to it, you kinda-sorta realize these are all just excuses.
You know that as a smart mom, having a budget and sticking to it, would give you peace of mind while shopping to buy what your kids need for school instead of the guilty stab after splurging at XYZ store (for me – Amazon Prime!)
Why you should start a budget
Right now, you might feel a little bit uncomfortable under the pressure that I’m TELLING you that you need a budget. But I’ll let you in on a little secret.
I can’t actually make you do anything ::gasp::
I can’t be there holding your hand every step of the way (although I wish I could!) and stopping you from swiping that credit card when you’re at the store.
You have to CHOOSE for yourself that you want to start saving money and living life more abundantly.
You have to choose that you’re willing to do anything it takes to meet your financial goals, save money, make more money, or whatever it is for you and your family, and that you are an integral part of the success plan.
Related Post: 6 Half-Way Real-Life Reasons Why You Need to Start a Budget
I dreamed of being able to stay home with my little ones after working the first 4 years of motherhood. And the day finally came true because we saved an emergency fund and refined our expenses. I gave up many of my “niceties” because I realized other things were just more important than going out to lunch every day at work.
“The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward.” – Amelia Earhart
When you choose to own your decision to make budgeting work, all sorts of things will come into play and you will find starting and sticking to a budget surprisingly empowering.
How to start budgeting to live more abundantly
There are several different ways to start a budget. What’s most important is that you just start. The decision to start is often the hardest.
Note before you start:
While doing this exercise for one month is helpful, it’s REALLY effective if you look at your history for a year. This will jog your memory on annual expenses like car registrations, gifts, and other once per year recurring expenses.
But if you don’t have the time for that, simply base your budget on your current calculations. That is OKAY. Again, starting is the best thing you can do.
Give yourself some flexibility and grace and realize that you might have to make some adjustments next month! And again, that is totally okay.
What you need to start a budget:
- Your method for budgeting
- Your pay stubs/monthly leave and earning statements
- Your bank statements/credit card statements
- 1 hour of your time
1. Decide the best method to budget
If you have a hard time starting because it just seems overwhelming… pick a method that’s the easiest to you now. No overthinking allowed!
You can always work towards something else later. I recommend starting with pen and paper first – just to get your ideas down.
But here are four different options to budget:
Option #1: A piece of paper and a pencil
The most basic way to start a budget could be on a napkin or a scrap piece of paper! Don’t discount this quick method.
Option #2: Free Monthly Budget Template Printable
If you want a little more guidance because you don’t even know where to start then this is a good guide.
- If you want a premade printable, you can grab that here!
- Here’s the post to walk you through filling out the free monthly budget printable.
Option #3: Microsoft Excel or Google Drive
If you’re not excel friendly, then this might not be the choice for you. But being able to save a living document on the computer that you can easily update, might be easier than you think! Plus you can edit it from month to month and share with your spouse.
- If you don’t have Microsoft Excel, go to Google Sheets and create a spreadsheet on there! This was how my husband and I shared our spreadsheets for the longest time, before we started sharing our documents on Dropbox.
- Online cloud sharing is a great way for you and your husband to stay on the same page with a budget!
- Grab this budget spreadsheet so all you have to do is plug and chug – without dealing with formulas and formatting.
Option #4: An online service
Online services aren’t for everyone since they do not want to either pay for a subscription service or they don’t want to integrate their bank information. I TOTALLY understand.
But, it does make budgeting more efficient and saves me time…and I’m all about efficiency! Time is money after all.
- While I absolutely LOVE using You Need a Budget because of their awesome app, bank integration, and easy to use software, I know that the monthly subscription service isn’t for everyone.
- You can try it for 34 days free if you want to see if all the bells and whistles are for you. As I said, we use them and have been for 7 years. (If you’re a student it’s free!)
- Other free website services to start a budget are Mint.com and EveryDollar.
2. Follow the Budget Equation I-N-W-S=$0
Once you decide your best method to budget, here’s how to set up your budget:
Step #1: Quickly add-up your monthly income (I)
- Include income from both you and your spouse
- Any cash, gift cards, or other monetary benefits should be included that you get with your job
Step #2: Calculate your “needs” (N)
Grab your most recent bank statements and a highlighter.
- Highlight any “bills” that are “must-pays” on your bank statements or credit cards
- This include loan payments, utilities, phone bills, internet, Hulu, etc. (This post talks about must pays)
- Add up everything you highlighted for one month
- This total equals your “needs” balance
Step #3: Calculate your “wants” expenses (W)
The remaining expenses are discretionary or flexible funds you can use each month!
- These are considered your “wants”
- I put food in this category because there’s a lot of ways to save money on food
- Add up the past two months to see your average discretionary funds
Step #4: Do some simple math
I promise this is easy math!
Calculate Total Expenses by adding Total Needs (N) + Total Wants (W)
Now Calculate your Remaining Balance by subtracting Total Income (I) – Total Expenses (N+W) = Remaining Balance
Remaining Balance will either be:
a positive number (aka you make more than you spend) or,
a negative number (you make less than you spend).
Step #5: Get to a “zero-based” budget
A zero-based budget should always be the goal of a budget! It is when your Income – Expenses – Savings = $0.
Likely you realized you’re in 1 of 2 categories after doing the calculations above.
Category #1: Your Income was GREATER THAN your Expenses
To Do: Your next step should be to set-up an auto-transfer of funds to a savings account so you can start setting aside money and not be tempted to spend all your income from month-to-month.
Category #2: Your income was LESS THAN your Expenses
If your in this category you’re not alone! According to the Financial Capability in the United States 2016 report, almost 1 in 5 households spend more money than they make every month and nearly 40% of Americans do not set aside money in savings at all.
To do: Your next step is to decrease your expenses so that your Income – Expenses = $0.
Step #6: Set up your budget for next month
If you haven’t grabbed the simple budget template printable yet, now might be a good time to do it. But to set up your budget it’s simply saying,
I make $100 per week; therefore, I’m going to spend $50 on needs, $40 on wants, and put $10 in savings.
To do: Use the numbers you calculated above to set-up your first budget for next month. Identify discretionary aka optional areas you can save and try to challenge yourself not to spend as much next month and to stay within your allotted amount. Pro tip is to look at it week by week because it’s easier to keep track of.
Doing No Spend Challenge might be good if you need to break some spending habits to look at what you really NEED vs what you WANT,
Reminder: Budgeting is assigning a future task to each dollar.
Tracking your expenses is not enough. Assign each dollar that comes in the door to do a specific job for you like buy food, pay for utilities, or save for vacation. And if you don’t have the dollars to assign, then don’t buy it!
P. S. All of these categories are included in The Simplified Budget for Families. Read more here.
Tips for Success in Budgeting for Beginners
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Things to Include in a Budget
Everything from monthly subscriptions to annual car registrations, all of these should be included in your budget. The goal is NO SURPRISES. Did you remember all 58 of these budget categories to begin a family budget?
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Follow a few simple budgeting rules
The #1 rule is to communicate with your spouse/significant other!
Start the money talk now in a non-confrontational way. If you’re like my family, I LOVE talking about money and budgeting, but it’s not my husband’s favorite topic.
Yet he recognizes the importance of being on the same page and building trust and partnership when it comes to money. Make sure you work with your spouse on this!
More budgeting rules you should try to follow:
- Spend no more than 30% of your monthly income on your home
- Spend no more than 10% on auto expenses
- Spend no more than 50% on other expenses
- Save at least 10% of your monthly take-home income
- Maintain a savings account of at least $1,000
- Pay off debt in order of highest interest rates (use this free calculator to create a payment plan)
- Save for annual expenses every month so you can prevent the debt cycle
- Track your expenses so you know where your money is going each month
Common Questions/FAQ About Budgeting
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Best Budgeting Tools for Beginners
- Budgeting can be as simple as a piece of paper and pen. But even if you want to get a little technical, you don’t have to have too many excel skills to manage your own budget using a spreadsheet on your computer (or even on your phone).
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How do you start a household budget?
- A budget always begins with knowing how much income you make. If you don’t know that, you’re not going to succeed. Many people begin tracking their expenses after that, but if you don’t actually give each dollar a job from your income, then you’re not actually budgeting. You’re simply being reactive, not proactive. To start a household budget, talk to your spouse about the areas you most want to spend money in, where you can save, and then don’t spent outside that amount.
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What should I consider in a monthly budget?
- Personally, I think you should consider being as detailed as possible so you can save the most. But, when you’re getting started, I think simple is best. Here are Budget Categories for Families to help you get started.
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How do you create a simple budget?
- I’ve outlined a simple budget in this post, but generally speaking it is your Income – Needs – Wants – Savings and do your best to make that equal $0. If you’re not making enough money to cover your expenses, either make more money with a side hustle or decrease your expenses.
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What’s the 50/30/20 rule?
- Senator Elizabeth Warren wrote about the 50/30/20 budget rule in her book “All Your Worth: The Ultimate Lifetime Money Plan.” This is a simple way of looking at a budget. She recommends your budget be broken down into 3 things at certain percentages. 50% needs, 30 % wants, 20% savings.
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Does a budget mean I have to stop eating out? I hate cooking!
- While a budget normally means you’ll want to cut expenses somewhere, it does not mean you HAVE to do anything. A budget is simply assigning dollars to do a job for you. If eating out is a priority, then that’s fine! Simply decrease expenses in another category. Budgets can and should be flexible, which is why there’s no one size fits all budget.
The Last Thing You Need to Know about Starting a Budget
Since you’re considering starting a budget, my guess is you want to save money for a specific reason. From going on vacation guilt free to buying a house sooner to paying off debt to being able to retire early – all of these are completely normal and reasonable reasons people decide it’s time to start budgeting.
The biggest advice I can give is to just START. 30 minutes once a week is better than nothing.