How to Make A Budget | Budgeting for Beginners

Auto-captioned from the film, lightly cleaned. Elena's words, not edited prose.

hi hello how's it going it's elena and i'm back at it again with another finance video these videos have honestly been some of my favorite to create this year as i go on my own financial journey learning a lot more about finances this year has been incredibly empowering to me and hopefully will be useful to you as well today we're going to be talking all about budgeting incredibly important tool for getting your finances in order even if you're just making barely minimum wage or you're making a ton of money each year budgeting can be so useful to understand where your money's going because every dollar has a job also by no means the person is going to say that you have to like penny pinch every dollar i'm all about enjoying your money you only live once we're only young once enjoying the present but i'm also passionate about being financially independent and feeling financially secure for the future i don't know if you've seen that interview by cher where she's like so i think someone asks her basically like oh are you gonna marry rich man she's like honey i'm the rich man and that is me this year i'm like i'm going to build my own financial future i want to understand my money i want to know how it works i want to know where it's going and i want to be able to take care of myself long into the future i feel like spending money or has never been easier aka budgeting is more important than ever with the ease of our cell phones you can literally just pull up anything you ever want and like it's one click away especially when your card information is saved to your phone so budgeting at first it can feel intimidating it can feel a bit scary but i promise you it's honestly pretty fun once you start to get the hang of it i kind of look forward to doing my like end of the month budgeting and like going through my finances so throughout this video i'm gonna be talking all about budgeting i'm gonna be talking about the best apps and tools i'm gonna be showing you guys my own budget and i'm literally gonna do my budgeting for the month and show you guys step by step how i do it and really bring you along for the journey so if you wanna learn all things budgeting just keep watching so just a few things to keep in mind this is gonna look so different for everybody depending on your job if you're just supporting yourself if you're supporting other people if you live in a city if you don't live in a city if you're a student if you're working full-time like it's gonna look really different it depends on what your priorities are as well so take that in consideration especially when you look at my own budget it's very personal so take some of this advice sit with it think it through for yourself figure out what works for you and your lifestyle and your own goals and then move forward from there so budgeting is basically all about the money coming in and the money leaving your bank account so your income and your expenses and you basically want more money left within a month so a budget surplus rather than a budget deficit in order to have a positive financial gain for the month and when it comes to the style budget you want to do you know you can do it on your computer you can do it on app you're doing a piece of paper and have a little budgeting diary so again figure out what works for you i'd recommend starting off with a goal it doesn't have to be some massive goal of like wanting to buy a house but i think having a goal will really help you be more motivated to stay on top of your money and your expenses maybe you do want to save for something big or maybe you just feel like at the end of the month where the hell does my money go you're stressed about paying rent so you feel like you just can't get ahead and that you just keep slipping up with your money finding that little motivating factor really will help you stick to figuring out a budget for you and sticking to that budget and keeping it up month by month if you're kind of wondering like where the hell do i even start what i recommend doing is pulling up all your bank statements from about the last three months i feel like that's like a helpful amount of time to kind of get a good idea of where your money's gone it's gonna change month by month so getting like three different months i think is really helpful to look through so looking at your detailed bank statement for the first time is kind of scary like you don't really always know what's in there there's gonna be some surprises i would say just go into it with some grace be nice to yourself don't be too freaked out we're gonna take it one step at a time in my case i kind of technically fall under like the freelancer side of things so my income definitely varies every month your income is more stable because you have like more traditional nine to five it's gonna be a bit easier for you but make sure you're figuring out what your income is for each month as well to your expenses before you have an income let's first break down your expenses so if you're just starting off budgeting you really want to go line by line on your bank statement and see where your money's going for me this is when something like mint comes into play i love mint i'll talk more about it later but basically does that categorizing work for you so 50 30 20 rule is like an age-old budgeting system that basically helps you kind of categorize your expenses there are different ways of doing this but this is just kind of a good rule across the board so it basically means 50 of your money should go to your needs 30 goes to your once and 20 goes to savings this is when it's important to understand the difference between necessary and unnecessary items for that 50 what would fall in there is like rent bills you have to pay your car in my case would be like a subway card not gonna be that sushi dinner night out that's not a necessity it's gonna be the grocery bill to kind of start off with building your budget it's helpful to tally up those absolutely necessary items to see what number comes up and then take your income and subtract it from that and what's left over is basically the money that's going to then be divvied up to your more fun spending so your once as well as your saving goals which can also include investing goals paying off loans debt things like that so then once you've kind of figured out by taking the average of each month for those different categories you can figure out what that budgeting number looks like for you for those categories when you total up your monthly expenses and your total income ideally your income is higher than your expenses that's where you get that budget surplus versus your budget deficit we want that surplus sometimes the 50 30 20 rule is a little bit broad there is one that i like from dave ramsey that i'll put up on the screen that i kind of loosely have used in the past instead of being 50 30 20 he like breaks it down a lot more so he'll say 10 giving which i like i'm trying to incorporate that more 10 saving 25 housing so your rent 5 to 10 utilities so think electricity water bills wi-fi 10 to 15 food so for you kind of to figure out is that groceries is that eating out what does that kind of add up to 10 transportation 10 to 25 insurance insurance is so expensive if you live in the us it's so annoying five to ten percent personal spending five to ten percent health five to ten percent recreation or fun entertainment and then five to ten percent miscellaneous so i think that's a little bit more helpful because it doesn't always perfectly fit in the 50 30 20 rule that's a little vague in my own opinion so now i'm gonna go through my own actual budget and go through every expense with you guys i'm not gonna show you everything i spent money on but i'm gonna show you guys how i do it it's become fun for me now i've been doing it for years i also just really enjoy like lists and spreadsheets and i like inputting numbers so that's probably why it's fun for me it may not be fun for you at all but i don't i don't hate it i don't hate it so in my case i have very differing income every month based off like brand deals and adsense if i do consulting work or something like that so i have to kind of adjust it every month also in my case i have been budgeting for many years now so i don't feel the need to assign a very specific budget number and amount to different categories if you're just starting off it's probably going to be helpful and what i actually do is at the end of the month i look at mint and then i take that information i actually didn't put it into a separate like master spreadsheet of all the past months of spending as i was saying earlier mint is incredible it's super helpful it's basically an online platform a website where you input your banking information and it tracks and kind of categorizes all of your expenses for you it is so helpful but it's not absolutely perfect like sometimes it will like miscategorize things it won't like show what my venmo payments were for and stuff like that so i like to take that information and kind of like carefully and closely go through it and then input everything into my spreadsheet hello from my computer yes i have an additional keyboard because my keyboard is broken because i spilled water on it i should probably move this on that note what we're going to be doing is i'm going to pull up my spreadsheet i'm going to show you guys as well as go through mint and go for my expenses okay welcome to my google excel spreadsheet big fan of these you can see here at the bottom i've been doing it for many a month i kind of figured out a system at this point so as you can see i already have some things set up here like my income section and i'm gonna go through each category so i have housing here as you can see you all already know my rent if you've seen my other videos and some other things my insurance my wi-fi my phone bill my exercise class that i love and spend too much money on it's actually more than that but that's okay shoppings for me what fits in the section is anything like clothing books home decor any item that's not like a necessity that type of stuff technology for me i personally have a separate category because i can business expense this like for my business so if i get a new camera if i need a new battery a memory card this section is more pertinent to me than somebody else bodega pharmacy living in new york city i like often will pop into like a bodega or a cvs and like grab a cliff bar and it will add up over the course of the month so i like having this section if you don't live in a city where you're like constantly just bopping in a little bodegas it might not be right for you next up is transportation gas if i'm driving cars ubers and lifts subway station plane tickets if i like need to spend extra to check a bag it will all fall under transportation entertainment r.i.p this used to look like concerts and movie tickets and stuff like that but these days there's not a lot in that section subscriptions is gonna be different from everybody i already have mine inputted because these are the ones that i use monthly health and wellness if there's any medication i need or if i like get my like lashes done if i get like laser hair removal retirement as you can see i already have and put it here because i put 500 towards my roth ira every single month and then when i invest into index funds kind of shifts each month grocery section i keep it separate from eating out drinks slash alcohol if i like buy wine to bring home or if i get a happier drink with a friend coffee again this employee section is more personal to me i'll hire sometimes like a videographer right now i'm having someone help me build a website i have an assistant as well so that will fall under this section taxes not fun and then miscellaneous here is for things where i'm like this doesn't really fit in a category but i need to like know what it is and then finally venmo i have a venmo section because mint will like show the venmo but it obviously won't say what the venmo is so i like to go through my venmo at the end of the month and look like did i pay a friend for food did she pay me for food like what was in there and input into here and then here we have the total expenses so i can take the sum of all these different expenses as well as the sum of my income and subtract them to see what i have spent over the course of the month if you're wondering why there's a bunch of different lines under each category as opposed to just one line for one number what i like doing for my personal budget is inputting every single expense i know it can sound like a lot but it actually doesn't take that long if you do it one month at a time and this to me is super helpful instead of seeing like shopping 400 and i look back at it in three months i'm like dang what did i spend 400 on so like for the eating out section i'll write down the restaurant i went to and how much i spent there so i can very much remember what that was what the occasion was okay i got that shirt from depop bought those three books so i know what is in that shopping category and it also will help me kind of figure out like where do i need to cut back as you can see here i go over to this budgets section for me and you can see the top here it has all the different months to look back on which is really lovely so you can see the different categories they have here and on the right it actually will say the numbers that are budgeted but i'm just not going to include that i don't want to be confusing to you because it's so unique to each individual what budget numbers you set but here's some example of different categories that helps categorize for you right now i'm on the month that we're currently in so that's why a lot of these are empty here but you can see it'll go green or red show you how much you've spent in certain areas clearly i've already spent money on restaurants but i haven't gone to grocery shopping yet note to sell i've clearly spent a lot on ubers already and then there's this everything else feature so you get to customize this for yourself and basically figure out what categories you want to be able to sort through so now i'm going to go back to last month let's start with like restaurants as you can see here are some of the restaurants i ate out in it doesn't perfectly reflect how much i actually spent eating out because i did put some on my credit card i did put some on venmo so i'm gonna take these different ones and i'm gonna input it line by line into my spreadsheet so i'll just i'll see you guys in a second so there's my total for the month as you can see i have some extra lines here so i'm gonna clean those up so i was a business major i had to take so many damn accounting economics calculus courses my brain does not work that way i couldn't tell you why i was a business major but one of the few lasting things from good ol accounting class there's this lovely feature that you can do and i'll show you as you basically press the dollar sign some you throw up a little parentheses and then you get to drag the areas that you want to be all added together so that helps you see the total amount that i ate out and dinners so now i'm gonna go do the rest of the categories i'll see you guys all right i'm back that probably took me about 45 minutes or so to input everything going through mint primarily and then also like i said chase venmo and mikey's paypal as well and it's interesting going through it it's semi what i expected but there are some areas where i'm still like oh i spent a little bit more than i think i quite realized which is why i love doing this method at the end of the month of going through all my finances for example i haven't gone out to like a happy hour and so long but the weather's warm i'm vaccinated things are opening in new york city and going out for like two cocktails really adds up so i'm like there's an area where i could put back on and then there's other areas where i'm like wow i barely went out for coffee it's nice to kind of go through all these different sections and kind of see how i did so a few tips for you one of them is there's a really incredible app called wine ab it's not at all realistic to do for a very long time but even maybe like a week or like two to three weeks i think would really be helpful and being a lot more intentional with your money every time you make a purchase you input it in there if you're getting a coffee if you're buying a pair of shoes online instead of just easily pressing spend on your phone and like not giving it a second thought you have to go into the app and manually input it which i think is a really helpful practice to very much be like all right i'm aware that i'm spending this money i'm being intentional about it i know where it's going and i've had a few friends do it and they found it super helpful and kind of like a kick to their system for when it comes to spending money another thing too with budgeting is be realistic if you set yourself up for some like crazy goals where you're like not spending any money you're setting yourself up for failure and then you're not going to want to even try it at all so i'd say set super realistic goals for yourself if anything maybe start off slowly and then kind of wean yourself back little by little what i love about having a budget too is it basically just helps me really understand where my money's going how i'm spending it and then it also allows me to understand like oh there's my guilt free spending money because i've already addressed the other money and i know where it's going and i know that i'm paying the things i need to pay i know i'm saving i know i'm investing so now i can spend this other money comfortably and i don't have to think about it like that's the best part about making money is to be able to have fun with it in my opinion all right i hope this was a helpful budgeting video for you if you enjoyed it would really help me out if you subscribe hit that notification bell hit that like button all the things it really helps me out with the algorithm as usual thanks so much for watching until next time bye you