Yes, You Can Become a Person Who Has a Budget (in 10 Easy Steps)

You’ve probably heard some or all of these bits of advice a thousand times by now: Never spend more than you make, start saving for retirement yesterday, don’t spend money you don’t have, create an emergency fund for a rainy day, always live within your means. The list goes on and on.

OK, so most of us know what we should be doing with our money. But why aren’t you actually, you know, doing it? 

If you’ve been avoiding taking a long, hard look at your finances—because you’re feeling scared, intimidated, overwhelmed, ashamed, guilty, or something else entirely—know that you’re not alone. Money is complicated and confusing, and it can be hard to know where to begin, especially if you’re grappling with debt. 

Even if you understand the fundamentals of budgeting in theory—add up what you earn, subtract what you spend—it’s not always that simple. You’ve got an entire lifetime of habits, misconceptions, experiences, baggage, lack of information, and emotions all wrapped up into the idea of managing your money—of course you’re reluctant to dive in headfirst.

But becoming a person who has a budget is easier than you might think. And no, you don’t have to become a whiz at using spreadsheets or start frantically clipping coupons (though you certainly can if you want to!). Here’s how to get started.

Resist the urge to put your head in the sand and assume your money problems will just disappear on their own—sorry, but that just won’t work. 

Maybe you’re procrastinating because you feel anxious and scared about facing your finances head-on, and that’s totally normal. Start by setting aside some time to reflect on your gut reactions to managing your money. Ask yourself what you’re feeling, then try to unpack why you’re feeling that way. What exactly are you worried about? Instead of running away from your emotions, it’s time to acknowledge and face them.

To move forward, write down the specific emotions you’re feeling on small pieces of paper, then tear them into shreds or (safely) burn them, a common therapeutic process known as “slaying the dragon,” says Amber Masters, who created the Deeply in Debt blog with her husband Danny to document their journey toward paying off $650,000 in student loan debt.

“It’s a good way to let go of those feelings,” she says.

One reason why money feels so overwhelming? You don’t really understand it. 

It’s time to brush up on your least-favorite subject. There are thousands of blogs, online communities, books, podcasts, workshops, classes, lectures, and opportunities to learn the basics of money. It doesn’t really matter which one you choose, so long as it’s something you’ll actually stick with.

Consider this an investment in yourself—it’s hard to tackle what you don’t understand, and you may have ended up in a less-than-ideal money situation in the first place because you didn’t really know what you were doing. Knowledge is empowering, and you’ll feel so much more prepared to tackle your finances head-on once you understand the basics.

“When I graduated from college, I had $50,000 in debt,” says John Schmoll, founder of the Frugal Rules blog. “Looking back, it was just ignorance. I was very remedial in my understanding of how to manage my money and that’s really what held me back. Financial literacy is not something we champion in our society. It feeds that shame and the fear a lot of people feel.” 

Time to crunch some numbers and actually get to work creating a budget. Set aside a block of uninterrupted time and prepare yourself to be uncomfortable for a few hours (in other words, don’t do this right before a date or work). Plan something fun or rewarding to do after you’re all done.

In the simplest sense, creating a budget means knowing how much money you’re bringing in (your income), then deciding what to do with that money (your expenses and your savings). If you share your finances with someone else, such as a partner or spouse, you’ll need to involve them in this process, too.

It’s simple addition and subtraction—no complicated math here, I promise. And if you hate spreadsheets with a passion, that’s cool, you don’t need one. A simple notebook will work just fine. If you’re a fan of technology, there are several handy and user-friendly apps and online calculators that can do a lot of the heavy lifting for you.

Start by writing down everything you earned and everything you spent last month. (It can be helpful to look at a copy of your bank or credit card statement for this part.) Your goal? To get familiar with exactly what your money is doing each month. 

Next, add up everything you earned last month. Add up everything you spent last month. Subtract your expenses from your income—do you have anything left over? Is this a negative number? 

A few other questions to ask: Did you put any money away into savings? How much did you put toward paying off debt? Did you pay your credit card bill in full last month?

Once you’ve got everything out in the open, scan through your purchases and take note of any common themes or patterns that emerge. Does anything surprise you or make you feel an emotion (or several)? Are you happy with your spending and saving? Really sit with those feelings, even if they’re negative. 

It’s time to start fresh. First step? Forgive yourself for past mistakes. You’re now starting from “Day 1.” While you can make positive changes moving forward, there’s no point in torturing yourself over the past—all you can do now is move forward.

“You have to give yourself a little credit,” Masters says. “We all make mistakes; it doesn’t do you any good to beat yourself up over them. This is the way our society is right now. We’re really hard on each other and we’re really hard on ourselves. You just take a look at yourself in the mirror and pull yourself up by the lapels and get after it. You have to forgive yourself.”

Now that you have a clear picture of what a typical month looks like, it’s time to make a plan. There are a number of different budgeting and debt-payoff philosophies out there, so, unfortunately, there’s no one-size-fits-all plan you should follow. You’ll have to research and decide which one(s) will work best for you. A few common techniques: zero-based budgeting, the debt snowball method, the cash envelope method, the 50/30/20 budget, and the “pay yourself first” method. 

Whatever you choose, start by thinking big-picture and brainstorming your overarching life goals and priorities—do you want to buy a house someday? Travel the world? Get married? Go to law school? Retire early? Convert a cargo van into a camper? These goals will give you something tangible and specific to focus on, no matter which budgeting technique you use.

“I know it sounds sort of cheesy, but start thinking through what you want in life,” says Schmoll. “My family loves to travel, so we don’t spend money on a lot of stuff in the short-term because we value travel and experiencing different places. It takes money to do that. It’s really looking at what you place value on.”

And while we’re on the subject of life goals, this is a great time to acknowledge something that’s decidedly unhelpful during this budgeting process (and, really, all the time): comparing yourself to others. Everyone does it. How could we not? Instagram has made it nearly impossible. While you won’t be able to curb this behavior overnight, it is something to be aware of and try to work on.

That neighbor with the shiny new car? They’ve got a huge car payment that you don’t know about. Your friend who just bought a house? They drained all of their savings and is looking for roommates on Craigslist to help make ends meet. Your cousin with designer shoes? They’re crushed by credit card debt. Your Facebook friend who just had a lavish wedding? Their parents paid for the entire thing.

Bottom line: We’re all on different timelines in life, and you never know what someone else is really going through. Often, there’s way more to the story than meets the eye. Now is the time to focus on you and your goals, priorities, hopes, and dreams—no one else matters.

“Comparison is one thing that never goes away, no matter where you are on your journey,” says Masters. “You might be thinking, ‘I’m this certain age, and I don’t have a house yet and I don’t have a dream car and whatever.’ You have to reset yourself. It goes back to looking at your own numbers and your own goals. You have to really just remember that comparison is the thief of joy and you have no idea what other people are actually doing with their money.”

Now is also a good time to evaluate your relationships, hobbies, and behaviors, taking stock of those that are helping you reach your financial goals versus those that are standing in your way—whether intentionally or accidentally. 

Consider how you can reframe or tweak these things by pressing pause, setting boundaries or, if necessary, purging unhelpful or even toxic friendships and habits from your life. You may need to have some hard conversations with people you love and you may feel some FOMO (fear of missing out) for a while, but in the end, you’ll probably feel relieved. There’s absolutely nothing wrong with putting yourself first, and you may actually help someone else get started, too.

“You’d be surprised how empowering it can feel to tell someone you cannot come because you’re on a budget,” says Alyssa Davies, who runs the blog Mixed Up Money. “The best lesson I learned was to be transparent with my friends and family about my money goals. For the most part, they were completely understanding, and some of them even wanted to join in on the spending freeze.”

With your life priorities in mind, start setting small, manageable financial goals that can serve as stepping stones. Sure, staring at $50,000 in student loans is intimidating and enough to make anyone feel sick to their stomach—who could possibly pay off that much debt? But when you reframe this larger goal into several much smaller tasks, suddenly, it’s not quite so scary. A few examples: Putting an extra $100 a month into savings, contributing enough to your 401(k) to earn your employer match, paying off $4,000 in student loans by the end of the year.  

Write these goals down, along with the specific deadlines or timelines you set for yourself. Celebrate when you tackle each goal or reach a new milestone—you deserve it. Before you know it, you’ll be making significant progress toward your big goals.

Hold yourself accountable by checking in regularly—maybe it’s always on Sundays so you can prepare for the week ahead. Review and adjust your budget accordingly. Remember: Your budget can and should be a living, fluid tool that you amend as your life changes.

At first, you’ll want to check in and take stock of your finances frequently, like once a week. But as you become more comfortable with these concepts, you’ll find that maybe you can scale back to every other week or once a month.

And don’t get discouraged if it feels like you’re not making much progress—this can be especially true if you’re paying off a mountain of debt.

“Money is a long-game,” Davies says. “Everyone is on a different financial path, and the best thing you can do is create a budget that works for you and your desired lifestyle and stop worrying about how long the days and months might feel. If you build good money habits, you will get where you need to be.”

Don’t let small missteps discourage you. As with making other life changes—working out, eating healthier, etc.—one bad day or week does not mean you should throw up your hands and give up on your financial goals. Just get right back on track the next day. 

Recognize that each month is going to look different, especially when it comes to your expenses, and that’s OK. Just make adjustments as necessary and keep going. 

“When we fall off the horse, we get back on—it’s not that you just run away from the horse entirely,” Masters says. “You have to recognize that it’s not going to be perfect every month and it’s totally OK. There is no perfect budget. There is no perfect month. You try to stick to living within your means and if something goes awry, next month you try again.”

Even if you successfully become a person with a budget, you can always seek help from experts. A tax accountant, for instance, might be able to offer money-saving strategies when tax season rolls around. A debt counselor can help you negotiate lower interest rates on your credit card debt or help you consolidate your debt into one monthly payment. 

If you decide to work with an expert, do some research first. Make sure the person or the organization you’re working with is legitimate—there are lots of scammers and bad actors who will prey on your lack of knowledge or your fear and anxiety. Ask about fees for services upfront, and get them in writing. Find out about their credentials. Look them up online to see if any red flag warnings pop up; also check the Better Business Bureau. Above all else, always remember that if something sounds too good to be true, it probably is—and you should run fast in the other direction. 

If you really just want help tackling your feelings about money, consider working with a financial therapist, a relatively new field of counseling that focuses on issues related to money. These folks won’t give you investment advice, but they can help you unpack and work through some of the emotions that come up when you tackle your finances.