Budgeting Basics for Beginners: Simple, No Nonsense
- Lex Rose
- Apr 11
- 4 min read
Updated: Apr 12
A budget is one of the most basic forms of money management. One of the most crucial parts of adulting in the western world. No matter your financial status, understanding your budgeting basics and keeping track of your money is the basis for any plans to become financially responsible.
Why do I need to understand budgeting basics?
The main goal of a budget is to understand and be in control of one’s finances.
At a time in life, our financial lives were simple. Maybe a part-time job, minimal bills. Some spending. The equation was easy to hold in your head. But over time, things have started to pile up. What used to be one monthly subscription is now several, and you can't even remember the password to login and cancel the subscription.
81% of Canadians say their income simply can't keep pace with rising costs. Not necessarily because they're overspending. Because the actual landscape shifted. Inflation outpaced wages. Housing got more expensive. Insurance, subscriptions, groceries, gas prices, and other everyday essentials all crept up.
The thing is, our financial lives didn't just get more complicated, it got structurally harder. We’re managing 18 different bills instead of zero. Inflation continues to sneak in, and wages do not always follow. This makes things more complicated than just managing a few things. Tracking it all mentally stopped being possible.
This is where the importance of tracking and analyzing our money and spending habits becomes important. With the added modern ways of doing things - such as all our transactions being automatically tracked by our banks, in apps (read more on this in: Skills Technology Convinced Us We No Longer Need) - it can be easy to become less intentional with your money and adopt an “it will figure itself out” mentality. We can survive this way, but it will only get us so far.
With the challenges that come with effective money management for regular people today, whether it be lack of time, guidance, knowledge or motivation, a basic budget will always be a good place to start understanding our money and spending.
How to start
Simple is often the best way, especially if your main goal is to just get started. A budget does not need to be absolutely perfect. It does not need to be overly complicated either.
For those of us who are beginners at budgeting, start off with categorizing your transactions into four categories: income, bills/expenses, savings, & debt. When starting a basic budget, these are the main types of transactions you will keep track of.
Income
The income category is a good place to start. In this section, we essentially note down all paychecks and other regular deposits.
Expenses / Bills
The bills section should have written out all of our recurring bills, many bills are paid on a monthly basis.
The expenses part is the section that can get a bit busy if you try to track every single expense separately. For the purposes of a simple budget, group your expenses transactions into a few categories, and on our budget we write the total for each category.
Tip: A transaction tracker can be used to track spending at a closer level, on a separate sheet if needed.
Debt
Similar to how bills are written out, this section should include all debt payments for the budget period.
Savings
For some of us, saving is a luxury. About 31% of Canadians say they have no money left after paying their basic expenses. Starting a budget is the first step toward building more room in your finances!
For those of us just starting out, even a small amount counts. Starting with $50 a month contributed to savings is better than $0. Having a budget will help see where you can adjust and prioritize savings where possible.
Now what?
After writing everything out, we are able to start building a clearer picture of a financial situation.
Here is a quick, downloadable and printable PDF that you can fill out and use to build your basic budget.
Print out this sheet, and use it to start tracking all of your money as described in the four categories above. Once you add up the amounts for each section, you will rewrite the corresponding totals in the final BALANCE section. Your Income will be a positive number. You will then subtract the remaining 3 categories: your bills/expenses, debt, and savings. The final number is your balance, what you are left with.
If you are left with a negative number, it is time to look at where changes can be made. If you break even or have a surplus, great. Keep going, you are on the right track.
We can't do anything about past decisions but learn from them.
Budgeting and achieving financial responsibility are two things in a very long display of delayed gratification. It can feel frustrating at the beginning. When we get a clear picture of our finances, and things are not where we had hoped they would be, it can be discouraging. But always remember, we can’t do anything about past decisions but learn from them.
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