Seriously, I do. I know it’s important to manage my income and expenses, but honestly, it’s pretty intimidating. And frankly, my budget is out of control. See a screenshot of my current budget at the bottom of this message.

Today, I’m making the change and getting a handle on this whole budgeting thing. Here’s how I’m thinking about it. 

Step 1: What’s coming in?

First, I’ve got to outline how much money I’m making each month. For me, this includes:

• Salary: my take-home pay AFTER TAXES - that’s important

• Side income: some of my investments pay dividends, so I’ll include these (also after tax)

Let’s say this comes to $7,000, just to use easy numbers.

Step 2: What’s going out?

This is where things get…daunting. Expenses may not feel like a lot at the time, but added up over the month, my costs can sometimes get out of hand. 

I’ll split my costs into two categories:

• Needs: things like rent, utilities, insurance, groceries

• Wants: this includes going out, clothes, and all the subscriptions I have (too many)

My needs come to about $3,000 and the wants come to around $2,500. 

So, in total I’m spending $5,500 per month from an income of $7,000. Not that bad so far! Of course, this is more of an average. Some months my expenses are lower and other months my expenses are problematically high (please do not add me to a group-chat titled “Mykonos 2025!”).

Step 3: What are my goals?

Now, time to look to the future. That’s the whole point of making a budget: planning! More specifically, planning for my goals. 

When planning out financial goals, it’s important to start with the foundation and work your way up. And make them specific so you can build a plan to achieve them!

• Paying off debt: First crucial step, if you have credit card debt, pay it off! Paying down high-interest debt, like credit cards, is super important. Luckily, I’m in the clear here - no debt.

• Emergency fund: This is the next-most important thing. An emergency fund is 3-6 months worth of your expenses in easily-accessible money, think high interest savings account. You need this, as the name would indicate, in case of emergency. I’ve already got mine in place, so thankfully all set here.
  

• Major purchase: Now we’re talking. I am saving up to buy a house in the next few years; it’s one of my key goals. I’ve already got some money set aside and invested, but I could definitely be saving more.
  

• Retirement: I’d love to retire! Thanks for asking! This is another key goal I’m saving towards.

Make your goals habits. I worked out that I need to save $1,500 each month to reach my goal to buy a house in a few years. I’ll make that a habit by setting up an automatic savings plan for each month.

Step 4: Bring it all together

Now that I’ve got my income, expenses, and goals written down, I can bring it all together in a budget. There’s lots of ways to do this, but one common technique is to allocate your income with the 50/30/20 rule:

• 50% for needs

• 30% for wants

• 20% for savings and debt repayment

Right now, my split is more like

• 43% needs

• 36% wants

• 21% savings and debt repayments

I’m a bit out of whack. I should bring my “wants” spending from $2,500 to $2,000, moving that money instead to savings. Eating out a couple times less and dropping one or two of the subscriptions I never use (looking at you, Disney Plus) should cover this. 

So my updated split will be:

• 43% needs

• 27% wants

• 27% savings and debt repayments

Spending less and saving more! I’m already feeling better.

Step 5: Track and adjust!

Budgeting is like staying in shape - not something you can do once a year then forget about it. Tracking how much you’re spending and saving is key to make sure you’re staying on track. Look at your bills and credit card statements each month, don’t just close your eyes and groan when those payment notifications hit. Know how much you’re spending! It’s your money!

If you notice you’re overspending in one area, reset and re-evaluate your budget. Focus on your goals instead of short-term wants! If you’re spending on something you don’t need (again, those subscriptions…) cancel them!

A few more tips:

• Use budgeting apps: things like YNAB (You Need A Budget) or Goodbudget are great tools to make budgeting much easier than the pen and paper or Excel methods.

  

  
  

• Automate savings: if you know how much you want to save each month, make it automatic! Setting up automatic savings with your bank and investment accounts means you don’t even have to think about it.
  

• Treat yo’self…sometimes: life is meant to be lived. All work and no play makes Aegon a dull boy. Reward yourself for hitting savings goals! It’s okay to treat yourself, after all, reward is the best motivator.

Free at last

If you aren’t budgeting, money can definitely be overwhelming. But, as soon as you start, I promise it’ll be something you look forward to doing. Now that I’ve got my plan in place, money is easy. I am free from money prison!