Basics of Budgeting for Those Who Know Nothing About Budgeting

In a perfect world, everyone would have parents who knew enough about money to teach their kids how it works. Countless memes float all over social media saying that money basics should be taught in schools to remedy this. Ironically, people who I sat in the very same room with while being taught about loans and credit are some of the people I see complaining about schools needing to teach this.

These are often people who love to share memes about “Here goes another day where I didn’t use algebra.” HA – OK. If you live paycheck to paycheck, you use algebra every pay period. You just didn’t know enough about algebra to know that’s what you’re using to figure out how much grocery money you have after bills. 

I might sound a little more harsh than usual, but that’s because we need the cold, hard truth with us when we’re making our first budget. The truth shall set you free

One truth about budgeting is that it happens long before numbers and figures come into play. Our budget is a snapshot of how we live. It doesn’t really matter what the exact numbers are. When you get money, how do you handle it? Are you impulsive to spend? Compulsive to hoard? That will determine your financial life. 

I like to conduct a small interview to test how well people are aware of their own money beliefs. You’d be surprised how many people will carry childish (alright…completely fucking stupid) ideas about money well into adulthood. I like to get them to say what they think is the truth about their spending before even hitting the numbers. This lets us know how far off the awareness is from the truth. THAT is a great step one in budgeting.

What Is The Truth About Your Spending?

If you have cash in your pocket, do you automatically view that as free and available to spend even if it’s supposed to add gas to the tank in a few days? 

Does “It’s only a couple of dollars” fly out of your mouth on the regular…almost as often as your account overdrafts?

Do you really think of cash that you’ve removed from your own damn account as something that is separate from the money you were paid for work, even though the money is from the same paycheck? 

Do you use a machine that costs $0.08-per-dollar to convert change rather than just spend the change for free because you view holding on to the change as “saved” money? (You do realize that this “saved” money costs you almost a dime-a-dollar to use, right?)

Do you rely on your bank’s daily online log to be up-to-date because you’d rather stick a leg into a wood chipper than keep track of your own bank balance?

Well, we may have found a reason you’re looking at a Basics of Budgeting post. If you feel called out over any of the above questions, odds are that you connected to all of them just a little bit. Let’s fix that.

Accounting 101: Equity = Assets – Liabilities

Translation into a personal level: Your Value = What You Have – What You Owe

Breaking that down more: You = Your Income – Your Expenses.

Income – Expenses is the most basic budget formula. So, you need to learn to track all dollars coming in and going out.

Habits – Not Just For Nuns

Are “Hail, Mary”s a part of your financial planning? | Photo by Vidar Nordli-Mathisen on Unsplash

Our lives are the sum of our habits. It doesn’t matter which aspect of our lives we’re talking about, it holds true for them all: Health, Relationships, Career, Finances…we are what is left of our good habits after our bad habits do their damage. 

Habits all have a cycle. I detail this in Wrap It Up, as well as discuss how to create a new cycle from an old one. It’s time to do this with money. 

The first step to budgeting – learn your habits. This takes us back to tracking your expenses. Notice how much of what you make goes to different categories of expenses, such as utilities, groceries, eating out, entertainment, etc. 

Know your spending mentality. Is it “Everything I have leftover after bills is fun money!”? This will have an impact on your ability to save and achieve financial freedom.

Spending Behaviors

It’s important to understand why you spend the way that you do. If you don’t take a moment to reflect on that, none of the budgeting hacks in the world are going to get you on track. EVERYBODY KNOWS HOW TO DIET AND EXERCISE – most just don’t. Budgeting is similar. We all KNOW that we’re supposed to spend less than we make. It’s a matter of knowing why you don’t do it.

Let’s look at the most common sources of bad money habits.

The Adults Who Raise You

The first place we get all of our information in life is our home. If the adults are good with money, they often understand that this wasn’t by accident and make it a point to teach their kids. If the adults are foolish with money, how can the kids know better? It takes an outside influence – an observation of money being handled better and an awareness of this. 

If the adults who raised you were bad at money or teaching money, you likely never got an outside influence to teach you the right information about money. If your parents lived paycheck-to-paycheck without learning how to save, and that never negatively impacted you so much that it drove you to figure out how to do better, you’ll repeat this life.

Childish Assumptions That Linger Into Adulthood

When you’re little, it’s easy to see people go crazy over money and want to blame the money. As kids, we don’t know better. We don’t know that money isn’t a magical item with good or evil intentions or that it doesn’t have the power to influence people. We want to think of our loved ones as good, so it is easy to blame the money.

Money is not a conscious entity or living thing. It exists because we brought it into existence. It has no power other than that which we give it. Money doesn’t change people – it makes them more of who they already are. If someone is already generous, they will be more so with more money. If someone is an asshole, same thing. 

Childhood Poverty

If there was no money, there wasn’t much to teach about it other than theories about money. Odds are, those theories were all misinformed. Many poverty circles will float incorrect ideas such as “It takes money to make money” or “The only way to be rich is to be born rich”. 

Comfortable Ignorance

If you never experienced true financial hardship, you may have gotten complacent about the idea of money always being around. If your youth didn’t have you experience moments of lacking due to someone else’s help, you will have never had an incentive to learn financial responsibility at a time it would have been easier to pull off.


Not wanting to put forth the effort to do better isn’t limited to tasks with a lot of physical work, such as exercise. You can be administratively lazy. The same cycles that lead you to procrastinate/avoid doing other tasks will find their way over here. 

Let’s be a little honest, here – you wouldn’t be an older adult just now learning about budgeting if there wasn’t a little procrastination about learning good money habits.

The same shadow work that would need to be done to address these above issues as they manifest in other behaviors (risky driving, substance abuse, hot-and-cold relationships, etc.) is the same work that will need to be done, here. 

If you don’t get past your past enough to change your present, your financial future will suffer despite what you know. Ask any diabetic who’s lost a foot after years of their doctor warning them that continuing to live as unhealthy as they were would lead to them losing their foot. 

Bad habits can literally cost an arm and a…well…you get it. | Photo by Anne Nygård on Unsplash

Now…the Budgeting

Now that we’ve looked at your past to learn how your childhood experiences with money affect how you currently look at money, it’s time to get new experiences so that you can move on with new actions so that your budget can be born. 

I have already droned on long enough about the thought processes behind your money habits. Here is where I pass the baton. 

If you are looking for assistance in getting started with your own budget, a friend of mine over at The Housewife Modern has gone through the work of producing a printable budgeting binder AT NO COST to help people get their finances on track. She has also created an anti-budget concept to help people who hate budgets.

For those who are serious about learning how money works, she has written Personal Money Management: How to Go From Debt to Wealth

I hope this helps offer you some insight into your spending thoughts and habits, and helps set you on the path to developing financial freedom.

Many thanks, and Best Blessings,

Neth W.

If you find value in what I share, please consider buying me a ko-fi to help supplement my writing habit. 

Feel free to follow me on FB at Neth Words and on Twitter @nethwords, and visit my website at, to keep informed about workshops, videos, and books in the making.


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