Starting Your Budget: A Quick Guide

Starting your budget, adjusting a budget, or tightening a budget can be a daunting task, but it doesn’t have to be. When my husband and I got married, it was hectic for more than a few reasons, but we knew we were going to have to figure out how to budget for a new living situation. We lived with my in-laws while searching for a place to move our family. I’m so grateful we were able to do this because it took the pressure of timing off and allowed us to find a steal of a deal.

We use (link) because it’s free and was recommended to us. It is an easy way to track spending. But when you are recording your budget, you have to have categories to determine where your money has been going, and where it needs to go moving forward. Starting your budget is the beginning!


How we came up with our budget numbers:

  1. Knowing Our Debt (Totals & Minimums)

We knew we’d be working really hard to pay off our student loans, but to start, we had to total up our minimum payments. All of our student loan minimums initially added up to over $1000 per month. YIKES to say the least! At this time, we also had a small interest free medical bill from our daughter’s NICU stay, so the total was about $1100 minimum per month. At first, I made an excel spreadsheet to track this, but a couple of months ago I found  UndebtIt which is a free debt snowball tool. More on the “debt snowball” later, but for now, it will help you record the balances on any debt, interest rates, and minimum payments you have to make. I can’t recommend that website enough. So we had those all figured out.


Note: just writing down all of your debt may be a big process in itself. It took me days to set up the online accounts for our student loan providers. Our federal loans required us to choose payment plans which took some time to be accepted.  It also took me additional time to figure out how to set up auto pay. This part can be scary, but beginning this is a step in the right direction! Comment and let me know if you are interested in more specifics on this, because it can be a lot!


  1. Insurance

We accounted for auto insurance, term life insurance (500K of coverage each for my husband and I), and renter’s insurance. Even though we didn’t have a rental, we anticipated $25 a month. It actually ended up being only $10.

Note: Renter’s insurance should NOT be considered optional. This is essential to your security in case of disaster. Your emergency fund wouldn’t be able to cover the costs of losing all possessions, so that’s where insurance comes in.

  1. Rent/Utility Estimations

We came up with a really rough estimate that our utilities would cost $200 per month. We figured this for electric, gas, water, and trash. This is a little below the actual cost, but since we were looking at the least expensive rentals possible, it evened out. In addition, we also planned for internet and phones. FYI cell phones are expensive, and we didn’t have the option to do cheaper providers based on coverage for the area we live in. I plan to write another post on How We Decided on our Rental.  We decided to apply as much of our income as possible towards debt, so our rental + all utilities is about 11% of our take home pay. Most people advise that your housing be “no more than 30% of take-home, but I’d say budget tighter. In fact, I would highly advise that if you are paying off debt of any type to find the least expensive option, because this will free up more $. Especially when you are not sure how far your budget will go at first.


  1. Daycare

Ouch. Daycare is so expensive, that I don’t know how some parents can even afford to work. We actually pay a bit more for daycare than our rent. It hurts. We found a well rated day care in our area that fit into our budget. In our current area though, the wait-lists are crazy long, so we were just happy to find an opening.


  1. “Living Expenses”

This will probably be the hardest part of starting your budget. Household goods, food, pet supplies, etc. I took some guesses, but this is something you will likely need to “troubleshoot” during your first few months. I took some averages that I found online for a family of three and made that our “goal” budget. To this day, we still seem to be working out our groceries vs household goods. It’s a learning curve but they seem to even out. We’re working on refining it every month.


  1. Extras

Make any extra expenses as minimal as possible.I’m going to refer you to Dave Ramsey on this one. Basically, don’t plan to be spending beyond necessities. We allow for eating out a couple of times a month (at INEXPENSIVE places like Chipotle), some “fun” money per person to keep us sane, and things like our gym memberships. This is where the smallest amount of money should be going.

Anything Leftover After Starting Your Budget? Follow the Baby Steps…

I really recommend Dave Ramsey’s “Baby Steps” This starts off with a basic small emergency fund. Dave recommends $1000, I say this can be different depending on circumstances but should be kept as small as possible. Next is to get out of debt (this is where Undebtit really helps!). Then you build a much larger emergency fund, and then move to investments, paying off your mortgage, and saving for other things like kids’ college. Refer to the DAve Ramsey website (link!So if you have nothing in savings, then the leftovers from your budget need to go there. Once you’ve got your mini-emergency fund saved, begin attacking your debt. Dave recommends the snowball method (smallest $ amount first), we have so far used the avalanche method (highest interest rate loan first) and it’s worked really well for us. When in doubt, use the snowball method.


Some Questions Answered:


What if I don’t have enough money to cover everything?

Tough love answer: you must decrease your expenses, or increase your income. It’s a math equation. You’ve got to have more coming in than out.

What if I don’t have debt, but am still new to budgeting?

Good for you! I would recommend lookiing here to determine what your next financial move should be. You will probably be able to be a little looser in some areas. For example: if we had no student loans, we might live somewhere slightly newer while saving our down payment.

Other recommendations for starting your budget:

  • Total Money Makeover or Financial Peace University –  Put it at the top of your birthday/holiday wishlist {link!}. if you don’t have the money to buy, check your local library! Otherwise, the Dave Ramsey Youtube channel and website are great free guidelines. This really helps with the “big picture” of what financial freedom can be.
  • Be INTENSE with your budgeting. Do not make excuses if you are overspending in one category. Slash your costs. Subscribe to my blog for ideas on this. I’m constantly coming up with ways to minimize costs.
  • Be Open – this is going to be a whole new post, but let some family at the very least know that you are making an effort to work on your finances. Hopefully this will help them understand why you can’t go out to eat with them all the time or go do lots of activities. Entertain at home!

I hope this helps you in the adventure of starting your budget and working towards financial happiness!

With Motivation,


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