Budgeting for Beginners

Budgeting for beginners can get very overwhelming, but if you ever want to take charge of your financial situation you will need to know how to budget.

Sadly, there’s just no way around it.

By being disciplined and setting a budget to direct your money where it will have the most impact, you will find the financial freedom you are searching for.

Budgeting is one of those life skills that really make things easier, once you do it regularly.

Don’t worry if you haven’t had any luck with budgets in the past or you are a total beginner, you can learn how.

Once you commit and follow the steps below you’ll find that conquering your budget isn’t as difficult as you first thought.

Are you ready to give it a shot? Ok, let’s go!

By the end of this post you will know

  • Why you need a budget
  • How to get started budgeting as a beginner
  • How to create a budget
  • You are able to budget on a low income or with irregular income
  • Understand the 50/30/20 and zero based budgets and how they work
  • Have some strategies to help keep you on track

It’s a long post so grab a cuppa and let’s get you feeling more at ease with your budgeting.

Why is Budgeting Important for Beginners?

I get that budgeting is boring but honestly not having any money is worse!

Beginners often avoid budgeting, because it is unfamiliar and they get overwhelmed.

Feeling relaxed, financially stable and having money for the things you need to buy is much more pleasant, don’t you think?

By doing a budget regularly you can make sure you are spending money on the things that are important to you and not mindlessly wasting it on the things that aren’t.

Doing a Budget Stops you Living Pay Check to Pay Check

Beginners are often inconsistent with budgeting. If you are currently living paycheck to paycheck, it’s a real red flag you need to spend more time on your budget.

By budgeting regularly and consistently, you can set your priorities and make sure you are meeting your responsibilities. Make sure you are paying off debts and paying your bills when they are due. Then you will totally avoid late fees and the stress of being overdrawn constantly.

A budget can take you from scraping for money all the time, to being a fierce and financially empowered woman.

Doing a budget will also solve your problem of living pay check to pay check, because you can plan ahead for all your expenses and there are no surprises.

Budgeting Helps Save for Big Expenses

You can also use a budget to effortlessly save for big expenses you couldn’t manage out of your usual cash flow. As a beginner, you probably just put these on your credit card.

When you allocate a little money each pay day towards your financial goals, you can achieve them quickly and without the credit card hangover. A budget helps you do this.

I believe doing a budget gives you back your financial dignity and helps you feel more empowered in regards to your money.

Looking at budgeting as a way to get what you want, instead of depriving you, may help change your feelings about doing a budget.

Design your perfect budget image


Budgeting for Beginners

Beginners can find budgeting a lot to take in at the start, but I promise you once you get a system going you are happy with, you won’t look back.

In fact it can change your life.

Budgeting is a skill that we aren’t taught at school, so there are a lot of people who are beginners when it comes to managing their finances.

You don’t need to have a large income to benefit either.

In fact, when you have a tiny income is when you need to budget even more!

Best Strategies for Successful Budgeting for Beginners:

  • Don’t make big changes too suddenly
  • Choose a budget that works for you and your lifestyle
  • Delay and distract yourself from spending
  • Stay away from the shops
  • Only carry the cash you need
  • Don’t beat yourself up if you mess up
  • Keep trying and don’t give up

Budgeting for Beginners on a Low Income

Beginners who have a low income are the ones who really need to budget regularly. I know when you have a low income, you can find it hard to stretch the few dollars you have.

Trying to budget on a tiny income can be really rough. You are constantly juggling priorities and often saying no to things you really want to do.

Try these strategies to help your money go further and make your budgeting life a little less stressful.

Essential Budget Tips for Low Income

  • Start tracking everything
  • Communicate with your creditors and let them know of your situation
  • Renegotiate any outstanding bills to reduce your payments
  • Find out what support or concessions you may be eligible for
  • Reduce your variable bills down by limiting your usage
  • Research your fixed costs to see if you can get a better deal on your contracted payments
  • Negotiate everything
  • Stop using your credit card and only carry the cash you need for the week on hand
  • Make small weekly payments on your quarterly bills like utilities via bpay or direct debits

Saving Money Strategies

  • Sell anything of value you don’t need. You can always buy it back later
  • Be mindful of food waste
  • Buy simple ingredients and make basic meals in bulk
  • Learn how to cook on YouTube. If you don’t cook this will save you loads of money
  • Grow some of the more expensive vegetables at home. You can use pots if you rent or live in a tiny place
  • Reuse leftovers and roll into new meals
  • Work extra jobs, take overtime, side hustle if you can
  • Look after your things. Replacement is expensive

More Budgeting Tips

  • Address the underlying emotional / behavioral problems that got you in this situation in the first place
  • Do everything you can to avoid touching your retirement
  • Educate yourself so you can get a better paying job
  • Learn how to say no
  • You may need to downgrade your car and your housing

It may not be possible for you right now, but eventually you will need to earn more to get out of this situation. No matter how brilliant you are at cutting expenses, you just can’t live on fresh air.

In the meantime, try to stay positive and know this situation is only temporary.

Living on a low income is really tough but things can and do turn around really quickly. I really hope you don’t have long to wait!

Budgeting for Beginners with Irregular Income

When you don’t have a set salary coming in on a regular basis budgeting can get a bit tricky. This is the technique I’ve used to manage my budget for my irregular business consulting income and it might help you to do the same.

The 50% Budgeting Technique

Have a high interest savings account to use to stash your excess income when you earn extra.

Allocate yourself a ‘set living wage’ based on your lowest earning month over the last 6 months.

Make sure this amount covers your basic expenses and doesn’t leave you hungry or homeless.

Then split any extra amounts over this in half, putting 50% in a savings account and leave the other 50% in your transaction account and prepay any bills you can (mortgage, electricity etc).

When you prepay your bills it really helps during times income is lower to have the essentials taken care of and stops you drawing on your savings too heavily.

A Note about Providing for Tax

If you are a contractor you’ll find this will work well for you as within the 50% in the savings account is an amount that can go towards your tax liability.

I usually account for about 30% but calculate my actual liability each quarter so I know exactly how I’m tracking before tax time arrives.

When your business has been running a few years you will get a feel for how the money tends to flow from quarter to quarter and you’ll find your own budget rhythm over time.

Creating a Simple Budget

To create a simple budget you need to:

  1. Identify your financial goals and priorities
  2. Calculate your income
  3. Review your income and see where you can earn more
  4. Calculate your expenses
  5. Review your expenses and see where you can cut down
  6. Don’t spend more than you earn. Ever
  7. Save $1,000 for emergencies (at least 10%)
  8. Pay off any debt
  9. Get up to 3 month’s living expenses tucked away
  10. Put a little away in retirement (again at least 10%)
  11. Start learning about investments and improve financial literacy

What is the 50/30/20 Budget Rule?

One of the simplest budgets to start with is the 50/30/20 budget, especially as a beginner.

The idea of the 50/30/20 budget rule is that you split your pay check between three different categories – needs, wants and savings.

Basically a financial need is an expense that is essential to you being able to function as a human being. It covers things like shelter, basic nourishing food, expenses that assist with hygiene and health, etc.

Wants are generally perceived as any expense that is over and above the basics. Fancier clothes, takeaway, extracurricular activities and holidays,

The line can get blurry between the two but only you can decide (by being brutally honest with yourself) where expenses fall for you.

How to use the 50/30/20 Budget

The idea is that you break your pay check into following buckets like this:

Here is an example of what a $1,000 pay check would look like:

50 30 20 Weekly Wage Example Women who are beginning to budget often prefer the 50/30/20 budget. Especially if they are not keen on being overly restricted.

They can easily work within this general framework freely, without it taking a lot of time to maintain.

If you are beginning your budgeting journey, then this is an easy and quick way to get started with managing your money more intentionally.

How to Manage Money Effectively as a Beginner

There are two practical things I believe help with managing money effectively, and work well for beginners who are starting to budget. They are to have the right systems and to choose a budget that works with your particular personality.

Tools to Help you Easily do your Budget

Budget Planner

I personally have gone back to paper and pen in regards to my budgeting. Doing my budgeting is part of my self-care routine. I have worked on making it an enjoyable little ritual where I get my binder all printed out, my pretty pens on hand and a cup of coffee and chocolate biscuits at the ready. ?

I work on computers a lot, so using a planner really works for me, as I get to take a break from the technology. Here is the one I currently use each month…

Simple Budget Planner Pack

Budgeting App

You can use a budgeting app, which are super easy to use on the fly. These are three of the most popular ones: Budget Apps YNAB Mint and Personal Capital YNAB – You need a budget is a very popular app that is a leader in the field of budgeting and is free for 34 days then $6.99 a month Mint – is by the team at Intuit who also make Quickbooks this app is FREE! Personal Capital – also manages your investments such as your retirement account as well. FREE with an option to upgrade.

Having your data easily accessible on your phone is a big plus for me and I love seeing the dashboards with everything there at a glance. It’s also easy to enter things on the fly and some integrate with your bank accounts and download transactions directly.

Keep in mind you may be breaching your banks terms and conditions of use and they might not cover you for fraud. Check your bank’s website for more information.

Excel or Google Sheets

I love Excel and after spending hours on it for my finance degree I’m pretty comfortable with it these days. I still maintain a spreadsheet in addition to my planner as I like to be able to access my budget away from home sometimes. As all the formulas update automatically which makes doing the entry really quick and you can import your bank statement into it directly. They even have in built in budget templates that are free. Great for you beginners on a tight budget!

Excel Free Budget Templates

Open Excel > Go to File > New and search Office.com for personal budget and try them out.

Budget by Personality Type

The secret to a successful budget is know thyself.

If you are choking on being restricted by a highly detailed multi page spreadsheet than using a system like the 50/30/20 would be a better fit for you. I used my paper financial planner when I was studying at uni, running my bookkeeping business, teaching accounting at TAFE and being a single mother.

My life was just too busy to deal with a complicated budget, and I knew if I didn’t watch my limited funds I would end up in big trouble. If you are in a similar situation and really frazzled with work and babies then don’t put yourself under even more pressure.

Zero Based Budgeting

If you have a more detailed personality, have a lot of anxiety around budgeting or tried looser budgets like the one before, then use a more detailed system like the zero based budget.

Zero based budget is when you have your income at the top of the page and then you allocate all of it into different expense categories.

Its call zero based because there’s no left overs, every dollar is allocated somewhere. My simple monthly budget template (below) is a zero based budget. Choose a budget system that suits where you are, and works with your personality type instead of against it. As a beginner budgeter, you’ll have a higher chance of success that way and you may actually start to enjoy it!

How to Draw up a Budget for Beginners

Work your way through the following steps to construct your own budget.

Budget Planning Process

  • Set your budget goals;
  • Record your income;
  • Sort your priorities and get rid of debt;
  • Identify current fixed costs that you can’t easily change;
  • Estimate variable costs (grocery, electricity etc) based on past bills;
  • Plan for major purchases on the horizon and allow an amount for them (car / house etc);
  • Allow free spending money so you can have some fun and not hate your life;
  • Set aside an amount for emergencies and retirement in that order;
  • Construct your budget ;
  • Stick to it for the entire period;
  • Measure what you spent back to your budget each month.
  • Celebrate as you’ve sorted your money and are back in financial control of your life.


Basic Budgeting Steps for Beginners

Firstly here are the 3 starter bank accounts you need: Budgeting bank accounts

Set Budget Goals

What are your financial goals you want to achieve during the next month, quarter & year? Survive? Become Debt free? Save for a house deposit? Determine what your priorities are so you can make sure your money goes towards achieving them.

Get Rid of Debt

Plan to get rid of debt first. Debt is very discouraging and you won’t be able to do much with your budget until it is taken care of. Make extra payments every pay period, even if it is only $5. Get that debt paid off asap. Start with the highest interest rate first and then move the payments to the next highest amount. Keep going until you are back to zero and cut up those credit cards!

What is your Income?

The best approach when budgeting your income is to only budget for money that is reasonably expected, such as wages and regular client’s work. You should only budget for what is guaranteed money to you.

When you do get extra money park it in your emergency fund or short term savings in case you need it to cover any unexpected expenses in the future.

Record all income in your monthly income tracker and in your monthly budget.

Identify Current Spending Habits

Firstly you record your current spending habits in a weekly spend tracker or a spending log so you have a good idea of where your money is currently going.

It’s a good idea to grab your bank statements and go back over the last few months to get a better idea of what’s going on at different times of the year.

Calculate Fixed Costs

Bank account #1 is for fixed costs. These are expenses that don’t change or depend on how much you use. Bank Account for Fixed Costs Fixed costs are the same amount every month, you can’t control these costs by using less usually; they are a set fixed amount.

When you go through your bank statements pick out the reoccurring monthly expenses like rent, mortgage, car repayments, internet and mobile.

Having a separate bank account for your fixed costs means you can automate this part so set up a bank transfer on pay day to the Fixed Costs account.

Write these figures in a monthly bills log so you know what they are at a glance and include them in your monthly budget. Be sure to check them off each month to make sure they went through.

If you need to cut back in your budget go through the monthly bills log and see if you can renegotiate your plans or find a cheaper deal.

Calculate Variable Costs

Bank account #2 is set up for your variable costs. Variable costs you can control and are expenses that increase or decrease depending (usually) on usage.Bank Account for Variable Budget Expenses Things like petrol, groceries, electricity (does have a fixed supply charge bit but disregard that), takeaway, entertainment, clothing and so on. There’s also home, vehicle and personal (eg hair) maintenance here too.

Think about things that aren’t routine like gifts, birthday parties, weddings, babies being born, and Christmas as these are known to be budget busters.

Add up what you spent for the last year and divide it by 12 for a monthly budget (or 52 if you do a weekly budget). Transfer this amount each month into your account and once it’s gone it’s gone.

You may also like to have it in cash instead of a bank account if you are a more visual person, as you can actually see it getting spent. Totally up to you.

Calculate a monthly figure for variable expenses and put in your monthly budget according to the category along with your monthly bills.

A Word about Groceries

I have to mention groceries here because it is one of the biggest variable costs you have and one you can use to adjust your budget when you need to.

When you are reviewing your grocery budget, honestly looked at whether it’s too high.

Are you wasting a lot of food each week? Is there food in the cupboard that is never eaten? Meal planning and having a separate budget just for groceries could help you reduce this cost significantly.

Be kind to yourself though and reduce things gently! Don’t go from spending 100’s of dollars a week to $20. It’s just not sustainable and you’ll feel like you’ve failed when you’re spending more.

Try cutting each week by 10-20% until you get to a level you think you can live with.

Plan for Major Purchases

Bank account #3 is for any major purchases you want to make during the year.

Set up a High Interest Savings Account

When you set your budget goals at the beginning you may have your eye on making a major purchase this year.

Calculate how much this purchase is going to cost (including all related costs) and work this amount into your weekly or monthly budget.

It is often a good idea to set up a separate bank account just for this very special money so it doesn’t get frittered away accidentally.

Also consider expensive times of the year such as Christmas or getting your car serviced that may put a strain on your budget. Set up a transfer to this savings account to provide for these too.

Allow for Fun Money so you Don’t Hate your Life

No matter how tight things are you really need to allow some pocket money so you can have a treat from time to time to help you keep going.

Little rewards along the way encourage you to stick with your budget when times are tough and they don’t have to be extravagant.

Just don’t go and treat yourself to $200 pair of sunnies because you saved $50 on your grocery budget ? It might be going out once a week for a coffee and a cake or buying a new lipstick to brighten up your life.

Whatever it is make sure it gives you maximum pleasure for your money.

Emergency Funds are for Emergencies

Even if you are in debt it’s important to have an amount set aside to stop you getting even more in debt when an emergency pops up.

A few examples of a financial emergency is losing your job, having a car wreck, expensive home repairs like leaking roof or blown hot water system. Big stuff!

Getting carried away at the shops isn’t an emergency ?.

Something no one mentions in regards to the benefit of an emergency fund is that it gives you financial dignity.

You don’t need to go to your parents or the bank to beg for money. It’s there for you when you really need it.

You feel really capable and adult when you can sort your financial catastrophes yourself. So please set up an account only for emergencies and start transferring an amount each week (even $10 will help!).

Your future you will be so very grateful that you did.

Retirement Planning

Taking care of your Retirement must be worked into your budget.

Contribute an amount that is at least 10% of your gross income into retirement and write it into your budget. Pay it out as a fixed cost as it really should be a non-negotiable expense.

I may be wandering into financial planning here but I feel so strongly that you should start providing for retirement from the second you get a job.

Related post: Retirement planning

It’s the easiest way to grow significant wealth, without having to have a high income or a complicated investment strategy. All you need to do is to put an amount aside (however small) in a high interest retirement account and never touch it.

In Australia we have a compulsory retirement system where our employer puts 9.5% of our gross income into a retirement account we cannot access until we are over 65.

If you are self-employed you need to provide this for yourself and the payments can actually be a tax deduction too.

Whichever country you live in make sure to look after future you and put aside an amount for your retirement.

It’s simple to do and the passive income you will make over the years will mean you can retire comfortably and stress free.

My Simple Retirement Planner

Check out my retirement planner to help get you started.

Beginner Budgeting Tips for Success

Before I go I just want to make sure you have some strategies to help you out when things go bad. In an ideal world you’ll create your shiny budget and never worry about money again.

That’s not reality.

There will be times when you break your budget and it’s easy to give up then and feel like budgeting is a waste of time.

New habits aren’t built overnight and looking at this as a long term skill you are developing and learning may help take the pressure off a little.

Distract Yourself

As I said at the beginning distracting yourself from spending money when you feel sad or upset is a great strategy.

Don’t go back to your old ways because you had a bad day.

Recognise you are upset and go for a walk, or call up a friend instead of going shopping to get the lift you need.

Studying Helps your Bank Account

When I was studying I found I didn’t have time or the energy to go buy things. Even going to the grocery store was a major hassle so I saved heaps of money this way alone!

I was also able to significantly improve my earning capacity by getting a degree. Studying was the best thing I did for my bank account it may help you as well.

You can look at online courses if you have difficulty getting to class. Lynda.com, Udemy.com and skillshare.com all offer short courses for a small fee.

Starting a Side Hustle

Creating another income source is a great way to keep busy and create more income, helping your budget out at the same time.

Even if you have limited time mowing lawns on the weekend, working in retail (instead of going shopping) a few hours a week or doing a shift at the local bar will all help distract you and give you some extra pocket money to enjoy.

Blogging and Etsy have been great side hustles for me, so you can even go online to find work if you can’t do a physical job or have childcare issues.

Don’t Quit when you Mess up

Get yourself some financial grit and keep going when you mess up. I always believe that no matter how bad things are, each night you get to press the reset button and try again tomorrow.

You only fail when you stop trying. Give yourself grace and know that tomorrow you will do better.

If this happens to you send me an email and we can chat about it, I don’t want you to feel like you are alone here. Doubt can be hard to shake when it’s whirling around in your head.

Quite often just having someone to talk to who gets it is all you need to get you back on track.

Put it all Together

Are you still with me? Congratulations for making it this far. There is a lot to cover when you are starting out with your budgeting journey. I hope you have found this helpful. By now you should know:

  • Why you need a budget
  • How to create a budget
  • You are able to Budget on a low income or with irregular income
  • Understand the 50/30/20 and zero based budgets and how they work
  • You have some strategies to help keep you on track

This will give you a great basis on which to build your first budget or hopefully give you the confidence to try again if you’ve fallen off the budgeting wagon.

If you follow the tips above I know you will set yourself up for budgeting success and you can now look forward to feeling a little calmer and more at peace when it comes to managing your money.

If you want a little more help sorting your budget I currently am doing a few money coaching sessions each month.

I only work with committed women who want personal attention and support with creating their budget. I provide an easy to follow system along with gentle accountability. Please get in touch to see if we are a match I’d love to work with you!

Budgeting Resources 

Budget Planners

My Financial Planner

My Retirement Planner

Budgeting Apps



Personal Capital  


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