Monthly budget planning
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6 simple budgeting tips for lazy people

by Leo Babauta

For several years, I focused on getting out of debt — but these days, I live completely debt-free and worry little about finances. It’s a beautiful thing.

If you’re a bit lost when it comes to budgeting, it’s not that hard. You just need to sit down and do it, and not put it off. Here are the steps I’d recommend:

6 simple budgeting tips

1. First, make a few lists.

Lists are easy. The lists you need: list all your monthly income amounts (estimate an average if you have irregular income); list all your mandatory payments (like rent, auto, power, groceries); list debt payments. See how much (if any) you have left over — if there isn’t much, see the next step.

2. Simplify.

See what “mandatory” payments you can eliminate. This might take time, but many things are optional. For example, I eliminated cable TV, magazine subscriptions, a car payment (going from two cars to one), and more. Also, see what discretionary spending you can eliminate while you’re trying to reduce debt — Starbucks coffee, eating out a lot, buying magazines or comics, etc.

3. Make savings and debt payments first, each payday.

Make that mandatory, even if they’re small at first ($50 each maybe). Try to increase them as you continue to simplify.

4. Make mandatory payments next.

Rent, car, utilities, etc. Make them automatic if possible, but if not, go online and pay them right away each payday.

5. What’s left over is spending cash.

Maybe it’s for groceries, gas, and fun money (eating out, etc.). If you have difficulty making your grocery and gas money last for two weeks, put the amounts you think you’ll need in separate envelopes — one for gas, one for groceries, one for fun money.

6. Long-term moves.

Over the long term, you want to decrease and even eliminate debt, one debt at a time. This will free up a lot of your money.

You also want to start saving for an emergency fund immediately, and build it up over time. This is crucial, as without even a small emergency fund, you’ll never smooth out the bumps that inevitably come up.

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