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Everyone says you need a budget, but we’ve never done it before. What should we do to start?

Staring at a blank page to write your first budget can be incredibly overwhelming! One of the struggles for people who are learning to budget is unrealistic expectations.

It’s easy to write a budget with a grandiose view of how you are going to save more money this month than you have ever saved before. Unfortunately, for many people, their budgets are unrealistic. When sticking to the budget doesn’t work, it’s easy to become frustrated and stop.



If this is your first time creating a budget, the very first step I would take is to look back on the last three months of expenses. Take the time to go through your bank statements or online account and map out where all of your money was spent. When you do this, be sure to go into each account or credit card to get the details; don’t lump expenses under “credit card”. Many times, online bank accounts will be able to group all your accounts together to help you with this step.

Once you have a picture of all your expenses, you will have a much better starting point for writing your first budget. Instead of guessing how much you spend on food or eating out, you will know what you’ve spent in the past. From this point, you can decide if you want to continue how you’ve been spending, or if you want to change.

This puts you in a much better position to plan out exactly how much you want to spend going forward.



Once you get an idea of how you spent your money in the past and mapped out how you want to spend your money going forward, the next question to address is: “can I afford this?”

One way to get a sense of whether your budget is on track with where it “should” be is to apply the 50-30-20 rule of thumb. This means that 50% of your after-tax income goes to necessities, 30% goes to wants, and 20% goes to savings or paying off debt.

Looking at this more closely, 50% of your income should go to necessities, meaning items in your budget that you can’t live without. For many people this is their mortgage or rent, utilities, food, or other items that are necessary to survive.

The 30% allocated to your wants should go towards items that enhance your life. Yes, your cell phone or cable bill falls in this category. Anything that makes life better, but could be cut in case of an emergency should go in this category.

Finally, the last category is the 20% towards savings or paying off debt. Many people have student loans or credit card debt. Debt should be taken care of before savings, with the 20% of your income going towards paying those balances off.



As with anything, the 50/30/20 rule of thumb is exactly that, a rule of thumb. Rules like this one are meant to be broken, but broken with intention. If you look at your budget and realize that your fixed expenses exceed the 50% of your income, it’s important to take a hard look at your expenses and if there is anywhere that you can cut back.

On the other hand, there may be reasons why you intentionally are spending more in this area of your finances. The most important thing is to be intentional and realize the risks that are present when you spend more than you would normally in any category.

Good luck to you as you start on your journey with budgeting!


Helpful Resource

The Everyday Money Workbook guides couples through communication, values assessment and goal setting to provide a foundation for budget planning. Our you and your spouse can use our BudgetingBlocks™ to visualize your expenses, income, debt, and “leftover cash” to create a budget that is unlike anything else you’ve used before.  Learn more about these products here.  To get started, download your free budget planner and balance sheet here.