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Monthly Budgeting in 2021

Here is the motto: We are lazy just like you, but we budget too! 

budgeting feat. image

It just hit you – you’ve come to the harsh realization that you need to start “adulting”. It sucks but you’re not alone. According to a trusty Reddit thread, one of the most important “adulting” skills is to learn how to both live and save within your means. 

 

Everyone has a different circumstance. Maybe your circumstance involves rent, supporting a child, a car loan, living in a state where the cost of living is so high it should be illegal (cough – New York & California),  probably student debt? Whatever the case may be, the idea is to take control of your unique circumstance while doing all things in moderation and within your means.  So what’s the happy medium? MAKING A BUDGET! 

 

It sounds like a lot to ask of a person but don’t worry. We budget too and already did the heavy lifting. 

CREATING A BUDGET

We know that creating a budget is something we should probably do but why is it important again?  

 

A budget is designed to help you balance your monthly income with your expenses. We created a spreadsheet template that has already broken this process down for you. It is free of charge and can be found below:

If making your own budget:

 

1. What is your monthly income? 

Everybody’s circumstance looks a bit different. Below is a breakdown on calculating monthly income:

  • One source of income: this should be relatively straight forward. 
  • Multiple sources of income: combine all of them and write down this monthly income number.
  • If income monthly income is not stable OR if commission based: utilize the average of the prior 12 months. Adjust accordingly for months that are busier / slower. 

** Pro-tip: When taking an average always round pay DOWN and keep it conservative. Everything else ROUND UP (utilities, groceries, etc.)

 

2. What are your monthly expenses?

Create a list with all of the monthly expenses, this will include:

    • Car payment
    • Student loans
    • Groceries
    • Subscriptions (Netflix, Hulu etc.) 
    • Gym membership

Separate the monthly expenses list into subcategories like so: 

Fixed

 (the same every month)

Variables

(subject to change)
Car payment Gas
Student loans Groceries 
Gym Membership Utilities
Subscriptions ** Do NOT include – leisure ( happy hour, travel, etc.) 

 

** Consider cutting back on wants that are not really necessary / that you are paying for but don’t fully utilize (Example: you love Netflix and Hulu but don’t really use Disney+ – consider getting rid of it). 

 

3. Compare monthly fixed & variable expenses to monthly income

monthly income – fixed & variable expenses = money remaining monthly

The combined monthly fixed and variable monthly expenses should leave you with a surplus compared to your monthly income for the sole purpose that we have left out leisure activities and casual spending. There are a few different ways to approach this but we personally use the 60/40 rule. 

 

4. 60/40 rule

With the surplus:

  • 60% goes to savings 
  • 40% goes to casual spending and activities ( happy hour, date nights, spend it however you choose!) 

The percentage can always be adjusted accordingly – but this is a percent that works for us and we live by! 

We’ve all been there. All you can do is the best you can. Baby steps – make yourself proud.