What’s in YOUR wallet: The Bare Basics to Budgeting

A budget is basically a plan for your income. It can be used as a guide for how and when to save and spend money. When starting an effective household budget, a complete list of all income and expenses are required. Income from 1st, 2nd, and all side jobs/hustles are required. Don’t get paid consistently? Pick the smallest amount you’ve made within 1 month’s time. Total up your Net Income (this would be after taxes – no need to include gross since taxes are typically taken out automatically.)

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Your expenses need to also be laid out in front of you…in writing! Hopefully this is also shared with your family members so nothing is left in the dark and a sense of trust can be established and maintained. Your expenses should include EVERYTHING you knowingly spend money on throughout the year – this could be weekly, biweekly, monthly, or even every 6 months. The anticipated expenses should be planned in order to maintain control over your finances.

Your complete list of expenses can include anything you pay into. Savings, tithe, mortgage, insurance, child care, clothing, food, and cable are just a few examples of typical expenses. If you have miscellaneous items you pay into, include an ‘other’ section for the average amount for the timeline structure. Do not be afraid to add everything as this will help you focus on what you need and things you just want to have. Writing out your budget can be an eye-opening experience and should be used as a guide as you may have to revise it a few times.

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After your initial information has been written, do the math! Ahhh…doesn’t everyone just love math? Your total expenses for the month can be subtracted from the income in order to determine how much you have left over for a ‘Spending Allowance’. To determine the daily amount you need to earn in order to cover expenses, simply add up your monthly expenses and divide by 30 (average amount of days within the month). For the specific amount of salary you may require to cover expenses, add up your monthly expenses and multiply by 12 (total months within a year). For your records, you can even divide the yearly expenses by 52 (number of weeks in a year) in order to determine how much you need to earn per week (or divide the yearly expenses by 26 like I do for how much you need to earn bi-weekly).

Why all the math?

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I like to emphasize specific budgeting practices to my job seekers and entrepreneurial clients in order to make it clear to them how much they will need to earn in order to know, what I like to call, their “bottom number.”

I refer to a “bottom number” as the amount individuals need in order to maintain their lifestyle. This number can be used to concisely and confidently negotiate salaries, raises, or personal goals within their careers. Our “bottom number” helps us to know without a doubt how much we can financially survive on and even compare it to how much we’d like to earn – leading to our desired lifestyle.

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Coming from a limited income background, I often used my budget to manage my expenses as well as to create what I desired. I would create my actual budget and then an alternative one that would include family vacations, seasonal shopping sprees, upgraded car payments, and additional childcare costs (I used to want a large family!). You can do this as well! It’s a great exercise for imagining the possibilities and envisioning your desires that some say, will ultimately appear if your focus is consistent. We’ll see! Stay tuned and one day very soon I hope to share my success story with you once I reach my goal of becoming debt free!

Feel free to retweet, comment, and share!

~be blessed,



2 thoughts on “What’s in YOUR wallet: The Bare Basics to Budgeting

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