Budgeting When You’re Bad With Money: A Beginner’s Restart

Money Guides · The Getting Ahead Guidebook

By Randy Hess · Founder, The Getting Ahead Guidebook

Understanding Money Problems: It’s Not Just You

If you’ve been struggling with finances, you might be wondering how to budget when you are bad with money. First, let’s get one thing clear: being “bad with money” isn’t about character flaws; it often stems from a lack of a structured system. Trust me, as someone who has made more than my fair share of financial mistakes, I know the feeling. It’s like fighting uphill with no map. But the good news is that changing your money habits starts with understanding the right steps to take—small but impactful changes can work wonders.

Start Small: Track Your Spending for Two Weeks

Before you dive headfirst into budgeting, you need to know where your money actually goes. That’s why I suggest starting with a simple habit: track your spending for two weeks. This isn’t about judgment; it’s about data.

• Grab a notebook, use an app, or a simple spreadsheet. Just ensure you’re consistent.
• Record every expense—from groceries to that coffee on the way to work.
• Don’t forget about those sneaky purchases: subscriptions, snacks, and late-night online shopping!

By the end of two weeks, you’ll have a clearer picture of your spending habits. You might find that you spend $200 a month on takeout. That’s valuable information.

The Power of Automation: Making Savings Effortless

The next step is automating your savings. By taking the willpower out of the equation, you set yourself up for success without even thinking about it. Here’s how to do it:

1. Set up a dedicated savings account. This should be a separate account from your checking where your spending happens.
2. Automate transfers: Set up an automatic transfer from your checking account to your savings account right after payday. Think of this as “paying yourself first.” Start small—maybe $50 a paycheck.
3. Consider establishing sinking funds: Calculate your annual expenses (like insurance or holiday gifts), divide by 12, and set that amount to transfer each month. For example, if your yearly car insurance is $600, that’s $50 a month saved away. This way, those bills won’t catch you off guard.

Setting Category Limits: Your Financial Guardrails

Once you’re tracking your spending and automating savings, it’s time to put some limits in place. Think of these as guardrails to keep you on track. Here’s how:

• Evaluate your expenses: Based on your tracking, identify the key areas where you can limit your spending. Maybe you designate $300 a month for groceries and $100 for entertainment.
• Use the envelope system: Withdraw cash for these categories at the beginning of the month. Once it’s gone, it’s gone! This builds a tangible awareness of your spending.
• Adjust as necessary: If you overspend in one category, balance it by spending less in another. Flexibility keeps your budget realistic and manageable.

Forgiving the Slip-Ups: It’s Part of the Journey

No one is perfect, and slip-ups will happen. It’s essential to understand that financial growth has bumps along the way. Here’s how to handle it:

“Mistakes are proof that you are trying.”

When you find yourself overspending, don’t beat yourself up. Instead, reflect on what led to the extra expenses and adjust your strategy accordingly. Maybe it was a special occasion or a sale that was too tempting to pass up. Learn from it and move on.

The Importance of Regular Review: Keeping Your Budget Fresh

Your budget isn’t a one-and-done plan. As your life changes, so will your finances. Schedule regular reviews—perhaps monthly or quarterly:

• Look at your tracking sheets: Are there any consistent categories where you’re overspending?
• Adjust your category limits: If you find you consistently overspend on groceries, increase that limit—and perhaps decrease it elsewhere.
• Revisit your savings goals: Are they still relevant? If you’ve saved up for that vacation, maybe it’s time to start saving for a home down payment instead.

Creating a Support System: You’re Not Alone

Lastly, surround yourself with people who support your financial goals. Share your budgeting journey with family or friends. They can offer accountability and possibly even share helpful strategies they use.

Don’t hesitate to look for resources as well. Whether it’s a budgeting app or personal finance blogs (like ours!), there’s a wealth of information available to help you. Remember, the SYSTEM matters far more than the software—and surrounding yourself with the right tools and people plays a crucial role in your journey.

Through patience, practice, and a little compassion for yourself, you can start to learn how to budget when you are bad with money. Remember, every step you take is progress. Here’s to your fresh start!

— Randy