Budgeting
What Is Budgeting?
Budgeting is a plan for how you'll spend and save your money. It helps you stay in control, avoid debt, and reach your financial goals faster.
Why It Matters
Budgeting is important because it keeps you from overspending or living paycheck to paycheck. It helps you build savings and pay off debt. It also gives you peace of mind knowing where your money is going, and is key to a healthy financial life.
Basic Concepts
Income: The money you bring in (paychecks, side hustles, etc.)
Expenses: The money you spend (rent, food, fun, bills, etc.)
Needs vs. Wants: Separate essentials from nice-to-haves
Emergency Fund: Savings you set aside for unexpected costs (start with $500-$1,000, aim for 3-6 months eventually)
Popular Budgeting Methods
50/30/20 Rule: 50% needs (rent, groceries, bills), 30% wants (fun, travel, dining out), 20% savings/debt payoff.
Zero-Based Budget: Every dollar has a job (income - expenses = zero). Great for detail-oriented planners.
Pay Yourself First: Save first (10-20%), then live on the rest
Smart Budgeting Habits
- Track your spending (use an app or spreadsheet)
- Automate savings and bill payments when possible
- Adjust monthly—budgets aren't static
- Plan for irregular expenses like gifts or car repairs
Mistakes to Avoid
- Ignoring where your money actually goes
- Setting a budget that’s too strict (and giving up)
- Forgetting to include small or annual expenses
- Not updating your budget when your income changes
Goal for Young Adults
Use a budget to build control and freedom. When you tell your money where to go, you stress less, save more, and stay on track for your goals—whether that's moving out, traveling, or buying your first car or home.
