Not sure how to budget or where to start? Then you’re standing exactly where I was a few years ago. Budgeting can seem overwhelming, especially if you don’t consider yourself a numbers person.

But to have any kind of financial success, you have to start budgeting. It took me a while to get a hang of it and I’m still making improvements, but if I hadn’t started when I did, I think I’d be a lot worse off financially than I am now.

Here I’ve outlined exactly what a budget is, why you need one, and what you should include. While I may not be an expert, budgeting has helped me immensely, and I know it can do the same for you. Hopefully this guide helps you jumpstart your budgeting journey!

What is a Budget

A budget is simply a way for you to track your income and expenses. It’s, in essence, designed to make sure you don’t spend more than you make, stay on top of your payments, and are allocating your money appropriately.

Budgets consist of everything from the big monthly expenses like rent/mortgage payments, car payments, and grocery bills to smaller expenses like subscriptions or the Cheez-itz you picked up at 7/11.

Bigger expenses such as buying a car or going on vacation may require sinking funds in order to save up enough to pay for them. If you don’t know what a sinking fund is, it simply means allocating a certain amount to save per month in order to reach your goal, typically with a certain end date in mind.

Some expenses recur monthly, whereas some recur every few months, or once a year. Others are more variable. Because of fluctuations in these expenses, along with life circumstances naturally changing, it’s important to make sure that your budget remains flexible. Whenever changes occur, update your budget accordingly.

If you find yourself unsure of where to start, simply remember the golden rule: when it comes to budgeting, track everything. The whole point of having a budget is to give you control over your money and tell it where to go.

Why You Should Have a Budget

The best thing you can do for your finances is start budgeting. It helps you uncover patterns in your spending. Because spending can be so emotionally driven, being aware of the patterns is the first step in actually breaking them.

If you have financial goals you want to achieve, such as buying a house or paying off your student loans, budgeting helps you get you sh*t together so you can reach those goals faster.

If, for example, you uncover a pattern of eating out excessively, you can change that behavior (cook at home) and take the money you were spending at restaurants to make extra payments on your debt and get your loans payed off quicker!

Budgeting can also reveal extra expenses you didn’t know you had and can cut loose, saving you money. You can’t cancel subscriptions you didn’t know you had in the first place.

What to Include in a Budget

To give you a comprehensive view of what to include in a budget, let’s take a deep dive into possible expenses that could show up in your budget. This is in no way an exhaustive list, and everyone’s situation is different, so everyone’s budget will look different.

Home

Any expenses related to your housing, whether you rent or own. This includes utilities and maintenance, replacing appliances, and even renovations.

• Rent/mortgage payment

• Insurance

• Utilities: water/sewer, gas/electric, trash

• Internet/cable

• Lawn maintenance

• Security system

• Cleaning service

Car

If a car is your main mode of transportation, there are many ways for the expenses to pile up just to keep your car on the road. Having an emergency fund for any unexpected repairs is always a good idea.

• Car payment

• Auto insurance

• Gas

• Maintenance (oil changes, inspection)

• Registration

• Car wash

• Parking

Food

I’m not gonna be the one to tell you Starbucks is the reason you can’t afford to buy a house, but if buying a coffee every morning is important to you, make sure to include it in the budget and sacrifice elsewhere. And do yourself a favor and delete the food apps from your phone – they make it way too easy to overspend in this category.

• Groceries

• Eating out: restaurants, fast food, coffee

• Meal subscriptions (Hello Fresh, etc.)

Health

Your health is important and should be made a priority when creating your budget, even if it means cutting out other expenses. Because of the close relationship between mental health and finances, if you struggle in this area it may be a good idea to include therapy in your budget.

• Health/dental/vision insurance

• Doctor’s appointments/copays

• Prescriptions

• Contacts/glasses

• Vitamins/supplements

• Gym/personal trainer

• Therapy

Pets

Taking care of your animals is an important responsibility. Pet insurance may seem like an unnecessary expense but could end up saving you thousands in the long run on vet bills and prescriptions if they get sick or injured.

• Food

• Medicine

• Grooming

• Toys

• Vet appointments

• Pet insurance

Personal Care

While deodorant is always a non-negotiable, if you’re struggling financially you should definitely cut back on the extras like hot stone massages and trips to the mall. At least until you can comfortably afford them.

• General grooming (shampoo, soap, lotion, etc.)

• Haircuts

• Manicures/pedicures

• Beauty treatments: waxing, laser, Botox, facials, etc.

• Massages

• Clothing

Entertainment

If it’s fun, it belongs in this category. From Netflix to plane tickets, don’t forget to include it in your budget. If you have a lot of debt, this is one area that should be cut out almost all the way, if not completely. Sacrifice now to enjoy these things later on!

• Streaming services

• Movies

• Concerts

• Sporting events

• Hobbies

• Vacation

Children

Raising kids today is expensive. It can cost around $20,000 per year per kid. Don’t let these expenses catch you off guard. If you plan on helping your kids get a car or pay for their college, make sure you budget for those expenses as well.

• Daycare/education

• Clothes and shoes

• Diapers/formula

• Toys

• Activities (sports, music lessons, etc.)

Education

Whether for you children or yourself, investing in an education can lead to better opportunities. Being financially prepared can help you in the long run after graduation. The more you can pay for out of pocket and the less you need to rely on loans, the better off you’ll be.

• Student loans

• Online courses

• Books

• Tutors

Gifts

Just because these events happen just once a year doesn’t mean we can’t plan for them. It’s important we remember not to overspend on a gift – if someone puts the “value” of a gift over the value of having you in their life, they probably don’t deserve whatever gift you got them in the first place. (Just sayin’!)

• Birthdays

• Holidays

• Anniversaries

• Showers

Donations

If you have the heart and the means to give, make sure you account for it so your good deeds don’t end up putting you over-budget.

• Charity

• Tithing

Other

Anything that doesn’t seem like it fits in the other categories can be found here. This includes investing and saving because they are vital tools to building your financial foundation.

• Life Insurance

• Investing

• Saving

Your budget won’t be perfect at first, mine certainly wasn’t. But over time, you will refine it and it will become like second nature (at least that’s what happened to me). It took me a long time to make any real changes and cut out the unnecessary spending, but I’ve found a budget that works – for now. Like I mentioned earlier, it’s all subject to change.

If you were on the fence about budgeting before, I hope that this has helped break down what a budget is, why you should have one, and what you should include. There’s no need to feel intimidated. Budgeting is fun, but you won’t find that out if you don’t start!