Budgeting 101

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There are two methods of budgeting: extremely detail-oriented or vague. Vague only works for those who have decent finances, but detailed budgeting is necessary for those who have a lot of debt and/or very little income. The less money you make, the more detailed your budget needs to be. If you make considerably more than you spend, you don’t need to factor in columns for car repair, oil change, and doctor appointment. You will always have enough in an emergency fund (3-6 months’ income) to cover these as they arise.

The top two budgeting programs are Mint and YNAB (You Need a Budget). Mint is for those who have decent finances, and YNAB is perfect for people that make less/have debt. YNAB requires more time, as your budget will be detail-oriented. Unfortunately, Mint is the only one that is free. Because of this, many with tight budgets turn to Mint, although YNAB would be a better fit for them (those serious about paring down debt, dealing with a shoestring budget, and figuring out exactly where every dollar is going).

In this post, you see that my lay-out is very similar to the YNAB method (detail-oriented). I factor in yearly expenses into the monthly expenses so Christmas gifts don’t surprise in December or the cost of a new dress. I do this because I am a detail-oriented person and love lists, but because my budget is not tight, I do not use either program to budget. I do rough calculations to make sure I’m in line with my expected target. There is no reason to make anything more complicated than it needs to be.


I do not ever use cash – only my Citibank Double Cash Card (so I can get 2% back on every purchase and some bills). It is better to learn discipline than it is to freeze credit cards in ice or separate cash into envelopes (missing out on cashback, carrying coins, and possibly losing or getting dollars stolen).

If you eat out a lot, having a card just for eating out (with 5% back, for instance) is worth it so that the bills are easy to separate out each month to make sure you’re hitting your set budget. Same for if you spend a lot on travel or clothes.

If you have a 401k plan, take advantage. Never pass up on a company match. You should put at least 15% of your income into retirement, even if you’re young and barely make anything. The younger you are, the larger your savings will end up.

You can see where people’s values are when you look at their budget. For me, a great neighborhood and food/tipping is where I like to put my money. I don’t have to spend money on books since I have Amazon gift cards and the library.

Some common categories:
car repair
beauty products
oil change

$1300 – rent (partial write-off)
$70 – electricity
$20 – water

$30 – cellĀ 
$80 – internet (partial write-off)

$60 – car insurance
$30 – gas

$100 – Massage
$10 – brows

$30 – medical
$20 – Amazon/Target
$300 – food/dining

$66 – steno software support (write-off)
$30 – dictation membership (write-off)
$12 – website

$30 – gifts
$10 – clothes
$12 – dentist/doc appointment

Also, 15% of income – retirement

How to get bills down:
Live within means
Cut out any sugar beverages
Cook more at home
Drive/travel less
Keep entertainment as simple as possible
Buy classic clothes/furniture that last
Work from home if at all possible (huge savings in lunch and car!)
Don’t allow television or magazines into your house

4 thoughts on “Budgeting 101

  1. Hi Melody,
    Your cell phone bill is so low! Do you have any recommendations for lowering your bill? I pay nearly 100.00 per month.

    • Hey Chris,

      The only way to get it that low is to get on someone else’s plan (a family member) or to go with a prepaid plan and never browse the internet. In college, I was able to get it down to $15 (texting often and using the calling only two days a month). But if you browse the internet enough and don’t have close family ties, $70-$90 a month is worth it.

      • My cell phone bill is about 20 bucks per month with no contract. I had to purchase my phone. I use Republic. I make most of my calls using WiFi so I can keep a minimum data plan.

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