Don't worry, I'll go first.

So I ultimately agree that the first thing to do is to recognize your known amounts. I start with a simple Excel spreadsheet and begin with known monthly income amounts first. Fixed or relatively consistent income gets it's own row. Then I try to think about other sources of income that I make throughout the year (if any) and then average that to a monthly amount.

Next I start with all of my known fixed expenses. Mortgage/rent, car payments, insurance, etc. Next comes known variable expenses like gas, groceries, etc. I always average out the last few months and try to lean towards a higher amount to be conservative. Last, I try to always budget for unexpected expenses. Vehicle maintenance, child injury, unexpected bachelor party...you name it, but every month on average SOMETHING unexpected comes along.

What I'm left with, I divide by 30 days to figure out what I can spend on a daily basis. Some days I spend over, sometimes way under...but this gives me a good idea every day on how I should be doing for the month. I find it helps to have that "per day" thought in your mind at all times!

Thanks for your follow up comment because this post is more like a YSK: You Should Learn How to Budget From Somewhere But Not This Post

I have multiple bank accounts for me and my wife. My wages get direct deposited into my "monthly Bills" checking account. Then I have a spreadsheet that calculates how much needs to stay in there and how much needs to go to other accounts. I have a groceries account and a joint spending account, which is mostly for take-out food. Then what's leftover gets split into personal spending money for each of us. I often cheat, and move money from one account to another, but before I do that, I always make sure I'm keeping track of regular monthly bills and other needs. It's envelope budgeting, but without cash.

One point I'd like to make is that I have a good job now, but most of my life I've lived in poverty. It's hard or impossible to budget under such circumstances, and you just have to sorta do your best day to day. It wasn't till I had reliable steady work that I've been able to do well budgeting.

I'm not seeing it yet - but YNAB is my current approach and I adore it.

I used to approach it in a project my income for the month and then assign that money into categories and into a savings pool. It was a good spreadsheet. I liked it.

But I find the envelope system that YNAB uses extremely powerful. You can set your categories (and it encourages you to remember expenses that only come up once in a while and budget for them on a monthly basis) and then you use the money you CURRENTLY have to fund them. You assign every dollar a job. Which means I can totally splurge on a fancy dinner... But it means I might be pulling money I assigned to my ski pass out (I sound ridiculously entitled, sorry... the blog posts they have give better perspectives if you are starting from high debt or low income). And I don't want to pull that money because I've been setting it aside slowly for months... So I don't splurge on drinks and dessert or I suggest street tacos or cooking at home for my friends instead.

You need to make a vertical list (ideally in a spreadsheet but paper is fine) of all your expenses that you can recall. Keep adding to this as your life progresses and you spend money on something not previously on it.

Add a vertical column and put the amount of that expense there.

Next to each item on the list note the expense frequency (monthly, daily, bi-weekly, etc...). Now, ask yourself how often do you get paid? Daily, Weekly, Bi-weekly...?

The next column over you need to convert any expenses with a frequency that isn't the same as your income frequency (Daily, Weekly, Bi-weekly). The way I do this is to multiply the expense amount by the number of times in a year you'd have to pay this to get the annual value for that expense. Then, divide by your income frequency/year to get it to match.

For example: Lets say you are paid weekly. You need to convert monthly rent of $1000 to weekly in order to match your income rate. To do this multiply rent x 12 (12 months/year) = $12000/year. Divide by 52 weeks in a year = 12000/52 means you pay ~$231/week (round up to the dollar) for rent.

Once you have done this calculation for all the expenses that don't match your income rate you can now add all the matching values and compare this total to your TAKE HOME paycheck as it all matches. If your expenses are greater than your take home pay you need to cut back on things immediately. If you make more than you pay out then you can start adding 'savings' to your expenses list for things like emergencies, large 1 time purchases, and retirement.

There are many, many ways to get stupidly pedantic about how the math is done. This was written to keep things as simple as possible in the hopes of reaching the most amount of people that could use it.

Edit: for expenses that are unpredictable (groceries, entertainment) you need to ballpark an approximate value. Conveniently, these type of expenses are often the easiest to control or over-budget if you can.

Edit edit: February is the only month where you need to be careful as it has the least # of full weeks in it which means monthly expenses can surprise you. Keep this in mind realizing that if you start budgeting today by the time next February comes around you should have plenty of savings to cover the 1x shortfall.

I’ve hit the limit for what I can chuck into retirement funds so I’m not sure what I’ll do when the money number gets too big.

Invest into non retirement accounts. When you have 30x your yearly expenses invested, you can safely retire.

If your 401k, Roth IRA, and Traditional IRA are all maxed out… A) great job! and B) put it into a regular investment account (not recommending Robinhood, but that’s the easiest example). There’s no max on that.

donate to food banks or sum shit

Do what I do and chunk it into a self directed investment account. A 3 fund portfolio is easy to set up and runs on autopilot.

The most crucial thing for me back when I learnt to not treat cash point says no = I'm broke was that: simply tracking my spending. When I had a better idea of where it was going, it was easier to cut back.

The other thing was always know your balance, which helped say no to things that were going to take me too close to skint.

I guess the third thing is understanding compound interest, but that came after I was on the path to financial health.

Same thing with weight loss, just consume less calories than you spend.

For sure. The key to getting into budgeting is to base your budget off current spending rather than desired spending.

Setting a goal to budget and cut spending at the same time conflates the budgeting with "I can't spend money anymore" feeling, and adds a hugely unnecessary, negative connotation to it.

Not necessarily. You can have a budget at any income level. It just might mean facing the fact that your expenses are higher than your income. No one says a budget can't show you how much your going into debt instead of how much your saving. My partner was there through his college. It's just depressing so you are less likely to do it. I don't know if I would stick to it.

But I think knowing where your money is going and where it is coming from is a key step in motivating yourself to make a change... either to fight for other opportunities or to change spending habits. And it also gives you visibility into what differences it makes on a weekly or monthly or yearly basis.

I'm going to reply to your comment... But check out the philosophy of You Need A Budget. One of their keystones is roll with the punches. If you go on a spending spree, you just acknowledge it, cover those categories with money from somewhere else (or have it be on a credit card where it'll warn you youre going into debt).

Envelope style budgeting:)

With no debt, this is perfectly doable

With no debt, no family and a high paying full time job

"Try saving 50%" ok thats about my rent which isn't actually that high for where I live... so I just stop eating to invest?

I think #2 is unrealistic for a lot of people... The other points aren't bad.