Money Made Easy: This Broke Girl’s Guide to Budgeting

It’s the beginning of a brand new year and you know what that means: a brand new YOU! 

...Just kidding. We’re still the same people that we were in 2020, no magical spell cast at midnight made us better at what we used to be bad at, and that includes money management. But that doesn’t mean we can’t take this opportunity to try and better ourselves and our financials. And this means taking a good hard look at our spending patterns and trying to adapt them to actually work for us (not just pretend that they do).

If you’re like me, you have bouts of being absolutely obsessed with the Refinery29 Money Diaries. “Why can’t that be me?” you ask yourself. “Y’know what, someday I’ll submit one! Not now, obviously, but when I get it all together.” And yet that day of “getting it together” has never arrived. 

Well, that day has finally come and we’re gonna do it together. It’ll take some time and some work, so get comfy, get some snacks, and put your comfort playlist on. And let’s get to it!

  1. 1. Get some research materials together

    Woman using calculator while counting bills in workspace

    Do you have a money blog you subscribe to? Or some Instagram accounts you followed for some money inspo but don’t ever really stick to? Now’s the time to use them

    One resource that I personally adore is the Refinery29 Money Diaries book (I really did go through a Money Diaries phase). It has a ton of real-life money diaries featuring different scenarios and has tips for money management. It even tells you to save a certain amount at the end of each chapter so you have the beginnings of a mini-savings when you’re done with the book! I also really love @BudgetingBrokeGirl and @SimplyPersonalFinance on Instagram; they give bite-sized money management tips almost every day.

  2. 2. Figure out where you want to be this time next year

    Hand inserting coin into plastic piggy bank

    Are you thinking of moving out of your parents’ home? Want to get your savings to a certain number so you know you won’t go into debt around the holidays? Have a big purchase you know you want to make soon? There are a multitude of reasons, big and small, for why you might want to budget more carefully, and there is no wrong answer. But there are always factors that go into each one. 

    For example, if you’re thinking of moving into a new apartment by the end of next year, consider the costs that move requires. You’ll want at least enough for the security deposit, any application or move-in fees, enough to pay a few months rent comfortably, and sometimes you need multiple months’ rent as a deposit. That’s at least a few thousand dollars, maybe even more depending on where you want to live. And it’s scary right now, but because you know that’s how much you need to save, you’ll have a reason to actually put money away for it. 

    Once you have your dream savings goal, you can really get into the nitty gritty.

  3. 3. Open up your bank statements (yes, all of them)

    Woman holding card while operating silver laptop

    This includes your savings account, your checking account, and your dreaded credit card statements. Open up that automatic saving app that you kind of forgot you downloaded a few months ago. Make sure you check your Venmo and CashApp, too. There might be some hidden dollars in there!

    Take some deep breaths. Now look at how much money you have (and how much you owe). Maybe you have more than you thought. Maybe you have less. Maybe you’re some sort of android-human that checks their bank account frequently so you know exactly how much money you have (if so, go you!). 

    On the verge of absolute panic? Don’t worry, me too; take some more deep breaths, turn the volume up on your pump-up playlist, and let’s continue.

  4. 4. Write down all your current spending habits

    Black woman writing at computer desk writing in journal notebook write natural work corporate african

    Somehow this is even scarier than opening the accounts up. Some prefer to use Excel or Google Sheets, some prefer to write things down manually, but physically taking down what you spend will actually make it real. Trust me. 

    Some banks will have this already broken down into categories for you, like “food” and “entertainment,” but you should still go through and make a set of personal categories that you know most of your spending falls into. 

    An example of this is: 

    Groceries

    Dining out (including Starbucks!)

    Entertainment (like going out to movies; remember when we could do that?)

    Clothes

    Subscriptions (Hulu, Netflix, Disney+...maybe the New York Times if you’re cool)

    Rent (if you pay it)

    Bills (if you pay them)

    Loans (school loans, car loans, credit card bills)

    Miscellaneous (this is things like gifts, unexpected payments, and anything you don’t spend enough on to warrant a full category) 

    Work out how much you spent in the past year in each of your categories, and how much you spend on average per month. And maybe realize you don’t need HBOMax and Netflix and Hulu.

  5. 5. Write down your concrete and necessary spending

    Hands counting dollar bills with woman using calculator in background

    These are costs that you can’t just magic away. If you still live at home or are dependent on your parents, you may have less of these, but these include rent, bills, groceries, and any minimum loan payments. If you have something else you’d really like to continue doing, like putting a certain amount into your savings or investment capital, stick that in this category, too. This is the skeleton of your budget that we’ll build the rest of your expectations around.

  6. 6. Write down "frivolous" spending

    This is spending that isn’t necessary for your survival, but don’t trick yourself into thinking it’s absolutely non-essential. Maybe getting Dunkin’ on Wednesdays is a really important part of your week! And hey, you need cute clothes to wear and you won’t wear them only sitting around your house (...OK, maybe last year you did, but we’re trying to move on from 2020!). 

    Realistically, this should just be breaking your categories into Necessary Costs and Unnecessary Costs, so it shouldn’t be too scary to evaluate.

  7. 7. Make your “perfect world” adjustments to your “frivolous” spending…

    Woman with planner

    In other words, cut down your unnecessary spending to the barest minimum it could possibly be. No more Starbucks! No more renting movies! No more splurging on super amazing shoes you saw on Poshmark and drunkenly purchased!

  8. 8. ...Then make your expectations more realistic

    If you go to Starbucks every day, it’s unrealistic for you to think you’ll be able to quit cold turkey. And you don’t need to! You deserve to treat yourself once in a while. 

    This is where you will flesh out your budget. If you want to save $3,000, you’ll need to find it in your unnecessary spending, so cut where you can and make those adjustments. Maybe you decide to only get coffee twice a week, or you’ll only rent a movie once a month. Whatever works for you, this is when you should cut it down. If you’re making a monthly budget, which I suggest, be sure to fluctuate categories when you need to; especially in months where you know you have a lot of birthdays or when holidays are coming up, move some money from one category into your gift costs, that way you’re not taken aback when those special days start creeping up. 

  9. 9. Finalize your budget

    woman studying on laptop

    Alright, so you have the rough edges of a budget. For it to truly work, you need to have it in a place where you can check in with it month after month to make sure you’re on track. If that means documenting it beautifully in your bullet journal, do that. Need to have it calculate averages automatically? Use a Google Sheet. (You can also find budget templates, like this free one from Simply Personal Finance.)

    Put in all your categories, specify which are necessary and which aren’t, and write down your end-of-year goal. Make sure to leave space for whatever you want to document each month, whether it’s literally what you spent your money on each month, or if you just keep a tally of what your costs were. Regardless of what you’ll record, you need to write down your spending in some way! What’s the point of having a budget if you don’t know you’re sticking to it?

  10. 10. Reevaluate your budget after a month — then again after three months, and six months

    planner, coffee, empty

    So you have your budget. Now you just have to stick to it. 

    But if after a month you realize you were too strict on yourself or weren’t strict enough? You can change it. Now, I don’t recommend going in with the mindset that you shouldn’t maintain your ideal budget, but if you realize you’re spending more on clothes than you do on food and your budget has them set equally? Switch them! The great thing about having a budget and keeping up with it is it keeps you aware of what you spend money on, so check in with yourself periodically and make adjustments if you need to.

  11. 11. Don’t beat yourself up about slip-ups!

    woman on bed with coffee

    If this is the first budget you’ve ever made (or maybe it’s the 10th but this time you’re actually gonna do it… no, that’s not a self-read, I don’t know what you’re talking about…), you’re bound to mess up a little. Don’t hate yourself if you have a hard time giving up that daily coffee, breaking habits is extremely hard. Just acknowledge that you made the mistake, try not to make it again and, eventually, you won’t.

Remember: budgeting isn’t a one-size-fits-all thing. Your spending habits are different from everyone else’s, and they should be! We’re all unique human beings after all. So the best way to make a foolproof budget is to make one that works for you.