The 20-Something’s Guide To Budgeting

“Budgets aren’t just a collection of numbers, but an expression of our values and aspirations” — Jacob Lew

Let that sink in for a second.

A budget is simply a record of how we prioritize spending our money. How we spend our money sheds light on what prioritize in our lives.

The good news is that everyone is capable of budgeting. The not so good news is that most people aren’t very good at it, or don’t do it at all. I believe the reason most people struggle to budget (myself included) is because we don’t have a clear process in place to do so.

Let me start off by clarifying what this post is not: a cry for you to stop spending your money, to invest wisely, or to save up for that awesome trip you’ve been talking about for two years (even though you probably should do all of those things.

The purpose of this post is to encourage building a better understanding of how we’re spending our money on a monthly basis so we can live with more freedom and clarity.

Here is a Google Sheet you can download and use to create your own budget as you read along. All you need to do is fill out the sections highlighted in grey, and I’ll walk you through them step by step. Honestly it should take no more than 20–30 minutes, and will be well worth it.

There are three categories we’ll work with:


This is the easy part, how much money do you make in a month? In the Income section, enter the type (salary, bonus etc.) in column D and amount in column E. You’ll see the summary section (row 2) begin to populate.

Fixed Expenses

These are the types of expenses which are going to hit every month, at a fixed amount. Examples include rent, car payments, internet, gym, Netflix etc. In the Fixed monthly Expenses section, enter the expense type in column A and the amount in column B.

Variable Expenses

This is where things start to get a bit tricky. Variable expenses are things that don’t have a fixed cost every month. Things like food, gas, entertainment, and shopping. I recommend creating a few categories to bucket your spending.

Here are the categories I use:

  • Food — Restaurants, groceries etc.
  • Transportation — Gas, taxis etc.
  • Entertainment — Drinks, movies etc.
  • Personal Care — Haircuts, laundry etc.
  • Shopping — Clothes, electronics etc.
  • Miscellaneous

Once you’ve dialed down the categories you’ll use to bucket your expenses, add these “expense categories” to column A in the “Variable Monthly Expense” section. Now the tricky part… estimating how much you spend on each category. If you don’t have data to go off of (most banks keep a record and categorize it for you), I recommend just estimating and adjusting month-to-month as you go along.

Once you figure out the budget you’ll allocate to each category, add the amount to column A in the “Variable Monthly Expense” section.

It’s important to gauge how well you’re doing at making your budgets every month, and adjusting accordingly. I use Mint to track my monthly spending, it’s easy to use and syncs up with my credit cards and bank accounts.

The summary section at the top will now give you a value for “Budget Net Income”. This is the amount of money left over (hopefully!) after all your expenses are accounted for. Now the fun part:

Using Your Budget To Do Awesome Things

This is the whole point of the budget! Now that we have an idea of where our money is going on a monthly basis, we can start molding our lifestyles to have more freedom. For example, we may recognize that we’re spending $300 a month on shopping. We’ve been wanting to go on a trip to Thailand, which will cost $1500, but can’t seem to save enough money to make it happen.

Ding ding! Have an idea? If we cut our monthly shopping by $125, and add in a $125 “Savings for Travel” fixed monthly expense, we’ll have enough money to take that trip within a year.

This is just a single example, but illustrates a larger point about how we can use a very simple budget to live with more freedom and clarity.

P.S. Thanks for reading, I really appreciate it. If you liked this post, please recommend it (by clicking the ❤ button below) or share it on social so others can take a look.

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