Making Your Money Work for You Budgeting for Beginners

Making Your Money Work for You: Budgeting for Beginners

What's Ahead...

7 Ways to Improve a Beginners Budget

So, how should a beginner budget? I get it, a budget sounds terrifying. It is like anything in life, you want to break the bigger scary thing down into smaller parts. If I tell you to swim a mile it is daunting, but you would know what to do if I told you to swim 10 feet. 

When it is broken down into smaller steps, you will see it for what it is and it becomes easy to deal with. 

You need to figure out what you can and can’t do in order to cut expenses, save up, and pay down debt so that you can live a better life.

Like almost everything in life, when you look at it head-on, it becomes MUCH less frightening.

This is about your future, your freedom, and a path to a life you may not have had otherwise. We don’t realize how the subconscious worry of the unknown is constantly in the back of our mind, draining our energy and keeping us from potentially doing and being something GREAT.

This is the first thing to do if you want to regain control of your life, get your energy back, and create a future that’s real and possible.

In other words, there are lots of positive aspects and very FEW negatives. Also, and you can do it all in a single afternoon.

Let’s take a closer look at this!

1. Get all of Your Statements in Order (Bank + Credit Cards)

To AVOID panic and becoming overwhelmed, do things ONE step at a time. Don’t get statements and then start going through each of them and freaking out about what stresses you out.

If they’re paper statements, get them all together and pile them up. If they’re digital, make a folder on your computer marked “Budget Statements”. When you name the statements within the folder, name them something you’ll remember that are easy to go back and reference days later, such as “CitiBank-CreditCard-August”.

To avoid missing any spending patterns, gather two statements from each bank or credit card you have.

Don’t just start writing without having a plan for each statement. Instead, ignore the statements for now and MOVE ON to the next step, which is going to be the way you organize and track the budget and monitor your overall progress over time.

2. Create a Budgeting Spreadsheet (With Payments + Dates)

This concept is based on creating a basic spreadsheet, but if you like, you can keep the same format in a physical journal, which will also work just fine.

  • Importance (***High Priority, **Medium Priority, *Cut Out Asap)
  • Vendor
  • Amount
  • Due Date
  • Frequency (monthly, quarterly, yearly)

Don’t get carried away. Your goal in this phase is to be able to view everything on one page. It’s about identifying what really matters and what doesn’t. This will help you to focus and eliminate the things that you spend on which don’t really matter for you to focus on.

It’s hard enough to keep track of things going on in your life; it’s impossible to remember every single thing you’ve spent money on from memory. However, this is a good thing, because you’ll be surprised at how much you can save by eliminating unnecessary purchases.


Remember, the battle is won with the LITTLE things.

3. Label Budgeting Items in Order of Importance 

Digital currency abstract concept vector illustration. Cryptocurrency market capitalization, electronic currency, e-money transfer, digital money turnover, transfer service abstract metaphor.

It’s very important to have a key at the top of your sheet. If you don’t have a way to quickly identify what is critical, important, and not important, everything becomes important, which will quickly overwhelm you.

You should also keep track of your expenses for a few weeks after setting your goals. If you come back to them later, you’ll have to think all over again about what is critical, not so important etc.

The process of prioritizing allows you to not have to re-think about it every time you come back to the budget.

It’s impossible for anyone’s memory to be good enough to remember everything along with the real life issues they have to deal with at the same time.

It will save you a lot of time in “mindless thinking” and frustration, which lower your overall brain energy.

Think of it simply as having a process to save you both time and energy. All you are doing here is creating a process that will save you energy and time. 

If you still struggle with how to prioritize, there is a good article from Life Hack Here. Specifically, look at the area of Covey Quadrants that was designed by Stephen Covey in his timeless classic, The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change

4. Figure Out High Priority Expenses

So, how do we know what’s critical and what’s not? Critical is something that if you don’t pay for, you’d be homeless or starving, and which would impact your livelihood so much that you couldn’t support yourself in society. Anything else is just important.

For example, you need somewhere to live and you need something to eat. You can’t avoid having to pay the rent or mortgage without dramatic negative consequences. You can’t not go shopping for groceries; you need them to survive.

If you work from a home office and need to use the Internet to work, this also needs to be considered critical. If you’re not working from home and your internet connection is purely for entertainment purposes then this wouldn’t be in the critical category either.

Likewise, your evening out for dinner and drinks doesn’t fall into the “critical” category of food. In this context, food is groceries that will sustain your life as a human.

Examples of ‘critical’ are as follows:

  • Rent/Mortgage
  • Groceries (this does not include dining out)
  • Utilities (Electricity/Gas/Water)
  • Internet (if you use it for work)
  • Phone (If you use it for work)

Now, let’s move on to defining what expenses are important but not critical.

5. Take a Closer Look at High Priority Expenses

‘Important’ here means those things that are NOT life-sustaining but are important enough to where it would affect you negatively if you did not have it. Assuming you don’t depend on your phone or internet to make money, those two would fall into this category.

Remember, if you do depend on your phone or internet to make money, these should go back up into the critical area.

Examples of ‘important’ are as follows:

  • Internet
  • Phone
  • Clothes (only enough to be genuinely useful, not fashionable)
  • Yoga membership (if you go 3+ times a week, this stays as important. Any less and it may be better to find another way to work out 1-2 times a week and eliminate this expense, i.e. doing home yoga or exercising outside).

Now that you’ve identified what’s critical and what’s important, everything else would be in the non-important category.

This doesn’t mean you have to cut out everything in this category, is more of a way to choose what you can live without. Many times, when you cut these things out, after a few weeks you won’t even notice. 


It is really the difference between a better future or a fleeting impulsive pleasure. 

6. Take a Closer Look at Low Priority Expenses

The non-important category includes things that you don’t need, things that take up too much of your time, and things that should probably be eliminated or minimized so that you can spend less time doing them and more time doing what matters most.

Examples of things that can be eliminated are as follows:

  • Traditional TV
  • Online subscriptions (if you have more than ONE)
  • Video games (unless you’re a pro gamer and making money from this)
  • Eating out
  • Nights out drinking
  • Happy hour with co-workers (unless it actually will help your career, but in this case, we’re assuming it does not)
  • Excessive clothes shopping
  • Excessive shoe shopping
  • Excessive accessory shopping
  • Buying something to impress someone else
  • Watches
  • Vehicles that are not used for essential transportation

By now, you’ve got a clear road map of what is critical, important and non-important, so you can see right in the front of you the things you can change.


You’re able to figure out what’s really important to you and what things you could easily live without if you had to.

Now it’s time for the last step: setting up your budget goals.

7. Figure Out Your Budgeting Goals

7. Figure Out Your Budgeting Goals


How to Budget Your Money The first thing to identify is what YOU want out of your life. Ignore what you think everyone else wants you to do. YOUR budget is YOUR budget – if you don’t want to eliminate things, then don’t.

A budget is just a guide to show you what paths you can take based on what’s really important to you.

I would recommend starting with the following filter questions:

  • What do you want from this budget? For example, not having to live paycheck-to-paycheck, increasing your savings, being able to pay off debt, retiring earlier.
  • What small changes can you make right now that have the greatest impact?
  • How much money would you like to save?
  • What little things are you spending on that don’t bring you much happiness?
  • How much are you paying for those little things each month?

Things to Cut Out From Your Budget


Budgeting Talk Wrap Up

Right now, it may not seem realistic. However, you can change the course of your entire life by creating a budget, setting goals for yourself, and sticking to them.

One of the best things about this concept is that there’s no cost involved. With a little guidance and personal efforts, anyone can learn to become good at it.

So remember, take the first step by looking at the total project (i.e. creating a budget). Next, break it down into smaller, more manageable steps. Then, set a deadline for each step.

Lastly, get to work on the very first step as it will give you momentum!

Paul Martinez

Paul Martinez is the founder of He is an expert in the areas of finance, real estate, and eCommerce.  Join him on to learn how to improve your financial life and excel in these areas. Before starting this blog, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.