How to Use Sinking Funds Like a Budgeting Pro (Even If You’re Not)

How to Create Your First Budget: A Simple Step-by-Step Guide

Hey there, friend! I’m Tom Bradley — finance enthusiast, cheap coffee connoisseur, and your friendly neighborhood money guy. If you’re new to budgeting, first of all, welcome to the start of your financial transformation. It’s not about depriving yourself. It’s about telling your money where to go instead of wondering where it went. Let’s roll up our sleeves and build your very first budget. Don’t worry, I’ll be with you every step of the way — jargon-free, judgment-free, and maybe even with a dad joke or two.

Why Budgeting Matters (Even If You’re Not a “Money Person”)

I get it. Budgeting sounds like a chore — right up there with cleaning out the fridge or organizing your email inbox. But hear me out: if you don’t budget, your money disappears faster than a free snack in the break room. A budget gives you:

• Clarity – Know exactly where your cash is going.
• Control – Stop overspending and avoid those “uh-oh” moments.
• Confidence – Smash your savings goals and even sleep better.

Whether you’re living paycheck to paycheck or just want to be a little smarter with your spending, creating a budget is your first financial power move. Let’s dive in.

Step 1: Figure Out Your Monthly Income

Grab a pencil, spreadsheet, or budgeting app — whatever floats your boat. Your budget starts with knowing how much money is actually coming in. Here’s what to include:

• Your paycheck (after taxes)
• Side hustles or freelance income
• Child support, alimony, or regular government benefits

Important: Use your net income — that’s your income after taxes, retirement contributions, and any deductions. Budgeting with your gross income is like planning a road trip with an empty gas tank.

Example:

If you bring home $2,500 from your job and earn $500 from tutoring on weekends, your total monthly income is $3,000. That’s your starting point.

Step 2: List Your Fixed Expenses

These are the expenses that show up like clockwork — rent, utilities, subscriptions. You may not be able to change them (yet), but you need to account for them.

• Rent or mortgage
• Utilities (electric, water, internet)
• Insurance (car, health, renter’s)
• Loan payments (student, car, personal)
• Subscriptions (Netflix, Spotify, that gym you swear you’ll start going to)

Add these up. This is the “non-negotiable” portion of your budget.

Step 3: Estimate Your Variable Expenses

Now let’s get real — how much are you spending on food, fun, and Uber rides you regret? These are your variable expenses and they can be adjusted, which is great news if you’re trying to cut back.

• Groceries
• Dining out or takeout
• Transportation (gas, ride-sharing, public transit)
• Entertainment
• Shopping

If you’re not sure how much you’re currently spending, go through last month’s bank statements and add things up. Don’t judge yourself — this is about awareness, not shame!

Tom’s Tip:

Group your spending into categories, like “Needs” vs. “Wants”. That frappuccino habit? Probably goes in the “Wants” column.

Step 4: Add Savings Goals

A smart budget isn’t just about getting by. It should help you create a future where you stress less and smile more. That’s where savings come in. Allocate part of your income every month toward:

• Emergency fund (aim for 3–6 months of expenses)
• Retirement (start small, increase over time)
• Short-term goals (vacation, new phone, car)

Saving isn’t optional; it’s essential. And here’s a wild idea — treat saving like a bill that has to be paid. Pay yourself first!

Step 5: Do the Math — And Balance

It’s time to plug the numbers into your budget formula:

1. Total Monthly Income
2. – Fixed Expenses
3. – Variable Expenses
4. – Savings Goals

If there’s money left over — congrats! You can use it to accelerate savings, pay off debt, or plan a little guilt-free fun.

If you’re in the red… it’s fixable! Find areas to cut back (bye, $9 latte) or increase income with a side job or selling unused stuff online.

Don’t Forget to Track and Tweak

Your first budget won’t be perfect. That’s normal, kind of like how your first pancake turns out weird. The key is to review your budget every month. Did you overspend? Did you forget an expense?

Use a notebook, spreadsheet, app — whatever works for you — to track spending and adjust. Budgeting isn’t a “set it and forget it” deal. It’s an ongoing habit, like brushing your teeth (but way more rewarding).

Tom’s Pro Tips for Budgeting Success

• Automate your savings so you won’t forget or “accidentally” spend the money.
• Celebrate small wins — like staying under your food budget — with cost-free rewards.
• Use the 50/30/20 rule as a guideline: 50% for needs, 30% for wants, 20% for savings/debt.
• Don’t quit after one bad month. Keep going and learn as you earn.

Wrapping Things Up

Congrats, my friend! If you followed along, you’ve now created your very first budget — and that’s a big deal. Think of it not as a financial prison, but as a roadmap to the life you want. Whether your goals are to crush debt, build savings, or just stop stressing about money, a budget is your launchpad.

Financial freedom doesn’t happen overnight, but it does start with one smart step — and you just took it. Want more down-to-earth tips like these? Head over to our About Us page or Contact Us to reach out with questions.

Now go forth and budget like the boss you are.