Just Starting Out?
Let’s get one thing straight: you don’t need to be a spreadsheet wizard or have your life completely figured out to create a budget that actually works.
If you’re reading this, chances are you’re tired of that Sunday night panic when you check your bank balance and wonder where all your money went. Or maybe you’re staring at your first “real” paycheck and feeling simultaneously excited and terrified about being a proper adult. Perhaps you’ve tried budgeting before but gave up when it felt like solving calculus while blindfolded.
Here’s the truth: budgeting isn’t about becoming a financial robot who never has fun. It’s about giving yourself permission to spend money on purpose instead of wondering where it all disappeared to. And the best part? You can set up a working budget in less time than it takes to binge-watch three episodes of your favorite show.
Why Your First Budget Matters (More Than You Think)
Think of your first budget like learning to drive. Sure, you could just wing it and hope for the best, but wouldn’t you rather know where the brakes are before you need them?
Your first budget isn’t about restriction – it’s about control. When you know where your money is going, you stop having those mini heart attacks every time you swipe your card. You can say yes to that concert ticket or weekend trip without the guilt spiral that usually follows. Most importantly, you start making progress toward the things you actually care about instead of just hoping you’ll have money left over at the end of the month.
Here’s what changes when you have a budget that works:
- No more surprise “insufficient funds” notifications
- You can actually save for things you want (revolutionary, right?)
- Money stress stops keeping you awake at night
- You feel like a functional adult who has their act together
Before We Start: Let's Bust Some Budget Myths
Myth #1: “Budgets are only for people who are broke” Reality check: Rich people budget too. They just call it “financial planning” and pay someone else to do the math.
Myth #2: “I need to track every single penny” Nope. You need to track the big stuff and have a plan for the rest. Obsessing over whether you spent €4.23 or €4.24 on coffee is a fast track to budget burnout.
Myth #3: “Budgeting means I can never have fun again” Actually, the opposite is true. When you budget for fun, you can enjoy it without the guilt hangover the next day.
Myth #4: “I’m bad with money, so budgeting won’t work for me” Being “bad with money” usually just means no one taught you how to manage it. It’s a skill, not a personality trait, and you can absolutely learn it.
The "Real Life" Approach to Your First Budget
Forget those budgeting guides that assume you have zero expenses and infinite willpower. This is budgeting for humans who occasionally order takeout when they’re tired and sometimes buy things they don’t strictly need.
We’re going to use what I call the “Bucket Method” – think of your money as water that you’re pouring into different buckets. Some buckets are for essentials (rent, groceries), some are for goals (emergency fund, vacation), and some are for pure enjoyment (that new video game, brunch with friends).
The magic happens when you decide in advance how much goes in each bucket. No more “I hope I have enough left over for savings” or “I’ll just be really careful this month.”
The journey of thousand miles begins with a single step.
~ Lao Tzu
Step 1: Figure Out What You're Actually Working With
Before you can make a plan, you need to know your starting point. This isn’t about judgment – it’s about reality.
Calculate Your True Monthly Income Look at what actually hits your bank account after taxes, not your “gross” salary that looks impressive on paper. If you’re paid bi-weekly, multiply one paycheck by 26 and divide by 12 to get your monthly average. If your income varies (hello, gig economy workers), average your last three to six months.
Don’t forget to include:
- Side hustle money (if it’s consistent)
- Financial help from family
- Government benefits
- That small investment dividend
Pro tip: Round down slightly. It’s better to budget conservatively and have extra money than to plan for income that doesn’t materialize.
Step 2: Identify Your "Must-Haves" (The Non-Negotiables)
These are your fixed expenses – the bills that show up whether you like it or not. Getting clear on these first helps you understand how much freedom you have with the rest of your money.
Your must-haves typically include:
- Rent or mortgage payments
- Utilities (electricity, water, internet, phone)
- Insurance payments
- Minimum debt payments
- Essential subscriptions (not Netflix, more like software you need for work)
- Transportation costs (car payment, gas, public transit pass)
The 5-minute trick: Open your banking app and scroll through last month’s transactions. Highlight anything that was automatic or essential. Don’t overthink it – you’ll catch anything you missed next month.
Step 3: Estimate Your "Need-to-Haves" (The Flexible Essentials)
These expenses are necessary but vary month to month. They’re often where budget plans fall apart because people either forget about them entirely or drastically underestimate what they actually spend.
Common flexible essentials:
- Groceries (actual food, not just snacks and energy drinks)
- Personal care items (toothpaste, shampoo, that face wash that costs more than your lunch)
- Clothing (especially if you’re building a professional wardrobe)
- Household supplies
- Medical expenses and prescriptions
- Pet care
Reality check time: Look at your actual spending, not what you think you should spend. If you’ve been spending €300 a month on groceries, don’t budget €150 and hope for the best. Start with your real numbers and optimize later.
Step 4: Plan Your "Want-to-Haves" (The Fun Stuff)
This is where budgeting gets interesting instead of depressing. You’re going to deliberately plan for enjoyment and goals, not just hope there’s money left over.
The “Future You” Bucket This is money for your goals and dreams:
- Emergency fund (start with €500, work up to one month of expenses)
- Debt payments beyond minimums
- Savings for big purchases (laptop, car, security deposit)
- Long-term goals (house down payment, dream vacation, starting a business)
Even €25 a month adds up. Don’t let perfectionism stop you from starting.
The “Present You” Bucket This is your guilt-free fun money:
- Dining out and takeout
- Entertainment (concerts, movies, hobbies)
- Impulse purchases under a certain amount
- Coffee shop visits
- Streaming services you actually use
- Whatever brings you joy
The key is setting a specific amount and sticking to it. When it’s gone, it’s gone – but when you’re spending it, you can enjoy it completely.
Step 5: Do the Math (Don't Panic)
Time for the moment of truth. Add up all your categories and see how they compare to your income:
Income – Must-Haves – Need-to-Haves – Want-to-Haves = What’s Left
Three possible outcomes:
You have money left over: Congratulations! You can put this toward your goals, increase your fun budget, or keep it as a buffer for months when you overspend.
You break even: Perfect! You’ve allocated every euro and have a complete plan.
You’re in the red: Don’t panic. This is information, not failure. Look at your “want-to-have” categories and adjust until the numbers work. Remember, this is your first budget – it doesn’t have to be your forever budget.
Making It Stick: The Weekly Check-In
Here’s the secret sauce that separates people who budget successfully from those who give up after two weeks: regular check-ins.
Every week (maybe Sunday evening with a cup of tea), spend 10 minutes reviewing:
- Where did I overspend?
- What categories were spot-on?
- Any upcoming expenses I forgot about?
- What adjustments do I need to make?
This isn’t about shame or perfection. It’s about staying connected to your plan and making small course corrections before small problems become big ones.
Common First-Timer Mistakes (And How to Avoid Them)
Mistake #1: Making it too complicated Your first budget should fit on one page. If you need a manual to understand your own budget, it’s too complex.
Mistake #2: Forgetting about irregular expenses Birthday gifts, car registration, that annual subscription – they add up. Create a “miscellaneous” category for these surprises.
Mistake #3: Setting unrealistic expectations You’re not going to transform into a financial guru overnight. Give yourself permission to learn as you go.
Mistake #4: All-or-nothing thinking Overspending in one category doesn’t mean your budget is ruined. Adjust and keep going.
Your Budget Toolbox: Keep It Simple
You don’t need fancy software to succeed. Choose whatever method you’ll actually use:
For the tech-savvy: Try our app Nero Budget (which uses AI to help track your spending and gives you friendly nudges when you’re about to overspend – kind of like having a financially-savvy friend in your pocket), or even a simple spreadsheet. For the pen-and-paper people: A notebook and calculator work perfectly For the visual learners: Try the envelope method with cash For the minimalists: A basic notes app on your phone
The best budgeting tool is the one you’ll consistently use, not the one with the most features.
What Success Actually Looks Like
Your first month won’t be perfect, and that’s completely normal. Success looks like:
- Having a plan, even if you don’t follow it perfectly
- Knowing where your money went instead of wondering
- Making small progress toward your goals
- Feeling more in control, even when unexpected expenses pop up
- Actually enjoying the money you spend on fun things
Remember, you’re building a skill. The first time you rode a bike, you probably wobbled and maybe fell over. But you kept trying because you could see the freedom that came with mastering it. Budgeting is the same – a little wobbly at first, but ultimately liberating.
Your Next Step: Just Start
You don’t need to wait until the first of the month, or until you have your life figured out, or until you’ve read five more articles about budgeting. You just need to start with what you have, where you are, right now.
Grab your phone, open your banking app, and spend 15 minutes figuring out where your money went last month. That’s it. That’s your first step toward financial confidence.
Because here’s the thing: you’re already managing your money – you’re just not doing it intentionally yet. And intentional money management is really just budgeting with a fancier name.
Ready to take control of your finances? If you found this helpful but want to tackle budgeting with a budgeting checklist, check out our guide on Monthly Budget Checklist: Build Your Plan in 15 Minutes – because managing money comes with its own unique challenges and rewards.
