By LITERALLY BROKE

If your bills constantly surprise you and leave you wondering where all your money went...you probably need a budget.

But how to make one?

...and more importantly, how to stick with one?

That’s what I’m here to teach you! Budgeting is something you can conquer. It just may take a little bit of work.

But I hate math.

But I’m overwhelmed.

Listen– money is overwhelming. They make it that way intentionally. That way, people mentally check out and trust the banks and the financial planners and the men in charge instead of their instincts.

But if you’re reading this, you’re probably OVER having a panic attack when you get your statement. You shouldn’t live in constant fear or avoid planning for the future just because you have a bill that’s due. The future will come whether you plan for it or not, so do yourself (and your loved ones) a favor and start budgeting today.

This is the 5-step plan I recommend you use to create a basic budget that works for you!

...And, for the record, I also hate math (I repeated Algebra II three times, in case you were wondering).

1. Calculate Your Monthly Income

Do you know how much you make each month? If you’re anything like my fiance (god bless his heart), you probably don’t.

Sure, you have a vague idea. But can you actually tell me your average monthly income?

The first step to making a budget is knowing how much money you actually make. The simple key to building wealth is to spend less than you make.

But how can you do that if you don’t actually know how much you make? This is an inception level problem, people.

Bare with me though!

If you’re an artist or creative you likely have a variable income, meaning it fluctuates month to month. This means it’s time to break out your bank statements and your calculator.

To calculate your variable income, look at your last six months of income and find the mean, AKA the total amount you made over those six months divided by six.

Write this number down on a piece of paper because it’s the number you should use to a standard budget.

You can always reevaluate and update your budget once you get paid to account for any fluctuations (whether they be negative or positive).

2. List Out Your Typical Monthly Expenses

Now, for the fun part! It’s time to calculate your basic expenses. This means housing, groceries, transportation, and utilities. To simplify your budget, things like pet care, cleaning supplies, and beauty items (necessary ones) can go under the grocery category.

Next, grab your calculator and add these categories up. Write this total down and subtract it from the number you came up with in section 1.

Moment of truth: do you have money left over?

If you don’t have enough money left over to do the things you want and need to do (i.e. get out of debt, save each month, invest in retirement funds, go out to margaritas with your friends) there are two solutions.

You can either make more money (think asking for a raise, getting a side hustle) or lower your expenses. In most situations you will do some combo of the two.

Think of ways to cut your housing and grocery bills first. Can you meal prep instead of spending a ton on frozen foods? Can you get a roommate or move to a less expensive area? These are questions to mull over.

But if your core expenses can’t be cut any further it’s time to either look for a new job or create another income stream.

I personally went through this in 2019 and by cutting expenses and increasing my income, I was able to increase my net worth by 15k on a 35k salary. You can also check out my post on side hustles for further inspo!

3. Set Your Money Goals

Budgeting is all about managing your money. But there’s no point in budgeting if you don’t know what you’re budgeting for.

In an ideal world you should be budgeting to afford both short-term and long-term goals.

Short term goals are things like taking a trip to Spain, self-funding a short film, or going back to school for an MFA.

Long-term goals are things like building a six-month emergency fund (in case of unemployment, illness, etc) and investing in retirement.

But the #1 way to fuck up your budget is to save...just to save. That is a recipe for you dipping into your savings to fund drinks out with the girls and a new dress from Reformation.

When your money is earmarked for something you really ACTUALLY want, it ACTUALLY motivates you to follow through on your goals. And more importantly, it makes you a LOT less likely to “borrow” from yourself.

And that’s really important. Cause’ outside of your artistic pursuits, there are just some real-ass-basic-living-a-decent-life things we need to save for as modern human beings.

Like retirement. Like an emergency fund.

Retirement? I’m twenty five! I’m not going to retire for, like, fifty years.

While artists and creatives may not feel like they need to retire, the truth is that it’s going to be hard (and even impossible, depending on your health) to hold down a lucrative career in your old age. If you think you’re going to be able to work three jobs with the same fervor you need to think again.

Because our life expectancy has increased and pensions plans are mostly a thing of the past, you NEED to invest NOW if you ever hope to retire.

And I know, I know. Saving an emergency fund and saving for retirement sound insane. You’re young and healthy. What could go wrong?

Well, look at the Covid-19 pandemic. There’s a reason so many young people are scrambling to apply for unemployment and unable to pay rent.

Emergencies happen. Whether you prepare for them or not is up to you.

So whether you like it or not, there are two things that need to be a goal for you whether you want them to be or not:

Saving An Emergency Fund
Investing In Retirement

Everything else is just icing on the cake. I created my free money workbook so that you can have the icing, too. To figure out why money (and ergo budgeting) matter to you, download it for free here.

4. Find The Best Budgeting Method For You

But how much should I be spending?

Just tell me how much to spend!

Everyone’s budget is different because everyone’s goals and values are different! And that’s A-okay! Actually, it’s great.

One size doesn't fit all when it comes to personal finance. But a really great rule of thumb for beginning budgeters is 50/30/20, a budgeting technique based on percentages that was popularized by our girl Elizabeth Warren.

50/30/20 breaks down like this:

50% of your budget should go to your bare-bones necessities. Necessities are things like rent, utilities, transportation (critical transportation, not Uber, FYI), and groceries.
30% of your budget is earmarked for your wants. Think of theater tickets, drinks out with friends, vacations, and your artistic goals (like self-producing a play).
20% of your budget is for your financial obligations. This is the part of your budget that needs to go to not-so-glamorous things like paying off student loans, investing for retirement, and your emergency fund.

Once you’ve calculated and personalized these percentages for your life it’s time to find the best budgeting app for you.

Finding the tracking system that works for you can involve some trial and error. Luckily I’ve had my fair share of trial and error!

In my opinion, these are the best budgeting methods:

Find monthly budgeting overwhelming? Try budgeting by paycheck.
Do you struggle with overspending? Try a cash-clip system.
If you’re visual and like pie charts and graphs try apps like Mint and YNAB.
Is journaling and list-making your thing? Try EveryDollar!

5. Make Budgeting Simple For Yourself

Expecting perfection from yourself is impossible. You will fuck up your budget. You will overspend. There will be some electric bill you forget about that throws off your cash flow. That’s just life!

When budgeting mistakes happen, all you can do is learn from them, move on, and do better next month.

The only way to become someone who budgets is to keep budgeting. You can do this! You just need to accept that there will be mistakes and fuck-ups along the way. It’s all about finding out what works for you, not for some girl on YouTube. OKAY?

Now get out there and take control of your money and your dreams. You’ve got this!

How To Budget When You Have A Fluctuating Income