Budgets ARE Sexy…When Simple

As my friend J-Money (okay, we’ve never met in person but he cracks me up and I love his blog) would tell you, Budgets Are Sexy. But not all of them. Some are just straight-up Debbie Downers. Before I get into my budgeting secret and awesome template (pretty sexy if I don’t say so myself), let me welcome all of J’s readers from his post featuring my paycheck distribution graphic today – thanks for stopping by!

J-Money: Earmuffs. Everyone else: I hate budgets. Especially ones that break spending down into micro-micro-micro categories like “Beauty –> Hair –> Highlights.” Don’t get me wrong – I love the idea of retroactively seeing exactly how I’ve spent my money, especially by sub-category.  That is useful. Trying to project spending in $20 increments on a monthly basis across 25 categories is not.

Enter my Four-Step Budget (I really should think of a sexier name)

As far as I’m concerned, your budget should include four numbers:

  1. Total Monthly Income
    1. This includes: paychecks, side jobs, anything that brings money into your bank account
  2. Total Monthly Must-Have Expenses
    1. This includes: Rent, utilities, cell phone bills, anything that will incur late fees; groceries
    2. This should also include automatic savings deductions. Saving is a must!
  3. Total Monthly Nice-to-Have Expenses
    1. This is more variable, but try to estimate. Are there things that you KNOW you spend money on every month like going out to eat? My “nice to haves” are things like getting my nails done, going out to eat, and my addictions: Starbucks and Amazon books.
    2. This does not include: one-off purchases (like a TV), major shopping trips or major travel (unless you take frequent weekend trips).
  4. Allowance (The Leftovers)

    1. This is where your math skills (or my handy template) come in. Subtract your total expenses from your income to get your allowance. This is the money left-over each month for you to spend as you’d like – shopping, weekend travel, etc. For bigger purchases, you may want to start a separate savings account and add that deduction to your “must have” column. Check-out my earlier post on Creating a Weekend Budget.

The 4-Step Budget Template

To make this four-step budget even better, I’ve created a detailed template (in Google Spreadsheets) for you to copy and fill-in each of the four sections. This is not a one-shot deal (although even going through the exercise once will give you a great head-start) – this is something you should continue revising over time as you monitor your spending. I’d love to hear how the template works for you if you give it a try. If you really like it, do me a favor and give me a rating on Google’s Template Gallery:

Need Some Help Getting Started?

Let me also take this opportunity to make a shameless plug for my coaching services! I’m not a financial planner and won’t be giving you specific advice, but I will help you address major problem areas, make sure your spending is in line with your values, set goals around money management and implement practical systems that will help you feel like you’re in charge of your money (not the other way around). Click here to sign-up for a free 30-minute session.

Not sold on my template? J-Money has a great list of Best Free Budget Templates & Sites.

{ 27 comments… read them below or add one }

Grace Boyle August 20, 2009 at 3:25 pm

Jenny and J, this is amazing.

Really useful tips and you even include a Google Doc of a budget. I’m definitely going to take a look. Although I consider myself “smart” with my money, I also have an approach that “Eh, it will all work out how it’s supposed to, even if I don’t track everything.” I know, you’re probably cringing…so this is an excellent (and easy) way to force me to buckle down.

Reply

Grace Boyle August 20, 2009 at 7:25 am

Jenny and J, this is amazing.

Really useful tips and you even include a Google Doc of a budget. I’m definitely going to take a look. Although I consider myself “smart” with my money, I also have an approach that “Eh, it will all work out how it’s supposed to, even if I don’t track everything.” I know, you’re probably cringing…so this is an excellent (and easy) way to force me to buckle down.

Reply

J. Money August 20, 2009 at 10:44 pm

Wha! Nah, no earmuffs needed here girl :) you break it down most excellently, and can consider your template added to my list! We all have our own ways of budgeting, just a matter of finding the best one that works for us. Glad you’re spreading the word!

Reply

J. Money August 20, 2009 at 2:44 pm

Wha! Nah, no earmuffs needed here girl :) you break it down most excellently, and can consider your template added to my list! We all have our own ways of budgeting, just a matter of finding the best one that works for us. Glad you’re spreading the word!

Reply

Ryan August 21, 2009 at 1:15 am

What every college student should start doing now. Easily one of the top 3 things I’ve learned to do in my life that has had a huge impact on happiness. We all hate getting to the end of the month with that worried fact on if we will make ends meet.

Great google doc by the way. Love it! Wouldn’t expect anything less!

Reply

Ryan August 20, 2009 at 5:15 pm

What every college student should start doing now. Easily one of the top 3 things I’ve learned to do in my life that has had a huge impact on happiness. We all hate getting to the end of the month with that worried fact on if we will make ends meet.

Great google doc by the way. Love it! Wouldn’t expect anything less!

Reply

J.D. Meier August 21, 2009 at 1:34 am

> This should also include automatic savings deductions. Saving is a must!
I like the fact you called this out. I’m a fan of pay yourself first.

Reply

J.D. Meier August 20, 2009 at 5:34 pm

> This should also include automatic savings deductions. Saving is a must!
I like the fact you called this out. I’m a fan of pay yourself first.

Reply

Jason Wier August 21, 2009 at 2:20 pm

Jenny, what you have is more of what I use and that is a spending plan. Easier to account for the not-so-frequent expenses too. Every time income goes it, it goes to a bucket and then you spend from the bucket. If the bucket is empty, then there is a problem (leak or miscalculated inflow). I cannot to the micro management as I would try to make it perfect and lose hope. Do what works.

Reply

Jason Wier August 21, 2009 at 6:20 am

Jenny, what you have is more of what I use and that is a spending plan. Easier to account for the not-so-frequent expenses too. Every time income goes it, it goes to a bucket and then you spend from the bucket. If the bucket is empty, then there is a problem (leak or miscalculated inflow). I cannot to the micro management as I would try to make it perfect and lose hope. Do what works.

Reply

Melissa August 21, 2009 at 2:47 pm

Hi — I just found your blog via Ophelia’s Webb and LOVE it! You’ve got good stuff here!

Reply

Melissa August 21, 2009 at 6:47 am

Hi — I just found your blog via Ophelia’s Webb and LOVE it! You’ve got good stuff here!

Reply

Elisa August 24, 2009 at 12:58 am

Such a great idea! I used to try to do those budgets that are 4 pages long or you need a masters degree in Excel formulation and would get frustrated and give up on them. Sometimes I think we get so caught up in the details of things like budgets and financial planning that we forget the primary objective of the thing.

About a year ago I decided to budget myself similarly to the way that you outline. Except your template is far sexier than my checklist on the monthly tabs of my planner. :)

Reply

Elisa August 23, 2009 at 4:58 pm

Such a great idea! I used to try to do those budgets that are 4 pages long or you need a masters degree in Excel formulation and would get frustrated and give up on them. Sometimes I think we get so caught up in the details of things like budgets and financial planning that we forget the primary objective of the thing.

About a year ago I decided to budget myself similarly to the way that you outline. Except your template is far sexier than my checklist on the monthly tabs of my planner. :)

Reply

Chinarut August 24, 2009 at 6:46 pm

i just love how you’ve simplified budgeting – you’ve absolutely started from scratch!! :)

so happy to hear you’ve embraced giving up “micro-managing” money!

wondering if you’ve ever been exposed to the work of T Harv Eker?

I can’t say I’vea gone all that deep but one thing I did take away was his “jars method” – think of these like “6 buckets of money”…

N – necessities (your “must haves”)
P – play (to address all the scrooges – there is value to spending money and not looking back regardless of how frivolous the expense!)
L – long-term (remember when you were a kid and you saved up for a bike?) – akin to your “allowances”
G – gift (no explanation needed!)
E – education (lifelong learning!)

and finally…

F – financial freedom account! (the golden goose!)

me think if you’ve read rich dad poor dad, you’re completely in alignment with all of this :)

now – i can’t say i’ve found an easy way to replicate this structure online – i haven’t found the courage to muddle with mint.com when it’s busy doing its thing automatically creating budgets (which is a godsend!)

i just thought I’d throw stuff out there – it’s something I’ve very grateful to have been shared and used in Thailand during the bootstrap phase!

thanks again for starting such great conversations!

Reply

Guest January 30, 2015 at 12:53 pm

hey just seeing this response looking for your comment the other day! oh Google 😀 curious how “play” has shown up for you over the past 5 (!) years? I’ve since figured out how to integrate mint & automate the jars method – it was critical to keeping play alive & gave up my fears to go on a cash-only basis last June. it’s been a great exercise figuring out how NPLGEF (figure out a new acronym yet?) operates at a microcosm level – the choices you *really* need to make in each area inside “real” constraints – gifting over the holidays was prolly the most fascinating. Anyhoo – feel free to point me to a more recent post on yr perspectives on money or just let it be :-)

Reply

Chinarut August 24, 2009 at 10:46 am

i just love how you’ve simplified budgeting – you’ve absolutely started from scratch!! :)

so happy to hear you’ve embraced giving up “micro-managing” money!

wondering if you’ve ever been exposed to the work of T Harv Eker?

I can’t say I’vea gone all that deep but one thing I did take away was his “jars method” – think of these like “6 buckets of money”…

N – necessities (your “must haves”)
P – play (to address all the scrooges – there is value to spending money and not looking back regardless of how frivolous the expense!)
L – long-term (remember when you were a kid and you saved up for a bike?) – akin to your “allowances”
G – gift (no explanation needed!)
E – education (lifelong learning!)

and finally…

F – financial freedom account! (the golden goose!)

me think if you’ve read rich dad poor dad, you’re completely in alignment with all of this :)

now – i can’t say i’ve found an easy way to replicate this structure online – i haven’t found the courage to muddle with mint.com when it’s busy doing its thing automatically creating budgets (which is a godsend!)

i just thought I’d throw stuff out there – it’s something I’ve very grateful to have been shared and used in Thailand during the bootstrap phase!

thanks again for starting such great conversations!

Reply

Jenny August 26, 2009 at 5:13 pm

Hi Everyone,

I just wanted to say thanks for all of your comments, feedback on my template and ideas!

@Jason – you make a good point that this is more of a spending plan than an actual budget. I guess my hope is that we can redefine budgeting to be one big number (the one at the bottom of my template) – which is your “free to spend as you’d like” number. Budgets feels so cumbersome to me because there isn’t that freedom of a lump sum that you can spend on anything (if every cent is pre-allocated).

@chinarut – love the NPLGEF concept, especially the point about “play” – sometimes I feel like I need to do that more with my money. Now you just need to find a way to work that into a snazzy acronym that rolls of the tongue! I really loved the book Rich Dad, Poor Dad – I think it is a must read. While a little heavy on real estate, I thought the principles were so important. A must read!!

@JD – definitely a fan of “pay yourself first” too – it’s the only way to go. Reminds me of the confidence post – if you don’t love yourself, others will have a hard time loving you. If you don’t pay yourself first, no one else is going to do it for you!

@Elisa – laughed out loud at the “masters degree in excel” comment – hilarious!

Here’s to simple, sexy budgets for all of us! 😀

Reply

chinarut January 30, 2015 at 12:56 pm

hey- just seeing this response looking for your comment the other day! oh Google 😀 curious how “play” has shown up for you over the past 5 (!) years? I’ve since figured out how to integrate mint & automate the jars method – it was critical to keeping play alive & gave up my fears to go on a cash-only basis last June. it’s been a great exercise figuring out how NPLGEF (figure out a new acronym yet?) operates at a microcosm level – the choices you *really* need to make in each area inside “real” constraints – gifting over the holidays was prolly the most fascinating. Anyhoo – feel free to point me to a more recent post on yr perspectives on money or just let it be :-)

Reply

Jenny August 26, 2009 at 9:13 am

Hi Everyone,

I just wanted to say thanks for all of your comments, feedback on my template and ideas!

@Jason – you make a good point that this is more of a spending plan than an actual budget. I guess my hope is that we can redefine budgeting to be one big number (the one at the bottom of my template) – which is your “free to spend as you’d like” number. Budgets feels so cumbersome to me because there isn’t that freedom of a lump sum that you can spend on anything (if every cent is pre-allocated).

@chinarut – love the NPLGEF concept, especially the point about “play” – sometimes I feel like I need to do that more with my money. Now you just need to find a way to work that into a snazzy acronym that rolls of the tongue! I really loved the book Rich Dad, Poor Dad – I think it is a must read. While a little heavy on real estate, I thought the principles were so important. A must read!!

@JD – definitely a fan of “pay yourself first” too – it’s the only way to go. Reminds me of the confidence post – if you don’t love yourself, others will have a hard time loving you. If you don’t pay yourself first, no one else is going to do it for you!

@Elisa – laughed out loud at the “masters degree in excel” comment – hilarious!

Here’s to simple, sexy budgets for all of us! 😀

Reply

Matt Cheuvront August 26, 2009 at 8:29 pm

Great stuff Jenny – a very sexy approach to a very unsexy topic. If I had room in my ‘budget’ *wink wink* I would totally hire you as a coach – but for now, I’ll stick with the great info your sharing here, free of charge. I need to get much better about setting myself a budget and really – as you know – it’s all about getting started. Once you have a budget in place and a template created, the rest falls into place naturally. It’s just a matter of taking a rainy weekend and applying myself to getting this financial side of my life in order. Thanks for the wisdom Jenny!

Reply

Matt Cheuvront August 26, 2009 at 12:29 pm

Great stuff Jenny – a very sexy approach to a very unsexy topic. If I had room in my ‘budget’ *wink wink* I would totally hire you as a coach – but for now, I’ll stick with the great info your sharing here, free of charge. I need to get much better about setting myself a budget and really – as you know – it’s all about getting started. Once you have a budget in place and a template created, the rest falls into place naturally. It’s just a matter of taking a rainy weekend and applying myself to getting this financial side of my life in order. Thanks for the wisdom Jenny!

Reply

Blake Sunshine August 31, 2009 at 12:06 am

I’ve been looking for an “easy” budget template for a while now! Thanks for posting.

Reply

Blake Sunshine August 30, 2009 at 4:06 pm

I’ve been looking for an “easy” budget template for a while now! Thanks for posting.

Reply

Erika October 18, 2011 at 2:06 pm

Unfortunately the template won’t open for me! I can view the example but then when I click “use this template” it says I cannot use it….help?

Reply

jennyblake October 18, 2011 at 2:29 pm

Sorry about that Erika! Will you refresh your browser and try one more time?

Reply

Abdullah December 23, 2011 at 10:56 am

This is really helpful, thanks a lot.. btw love the template! 

Reply

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