One of the easiest ways to understand a person’s life is to look into their spending habits. For example, in college I spent the majority of my income on coffee and books. Have we not all been there?! Although this may seem like a simple example, I think we can use this principle in any stage of life we find ourselves in. Spending money on things we enjoy doing or put value in, is part of the reason we are motivated to work. We motivate ourselves to save money because we believe that after we achieve our goal we or people we love (value) will benefit from it. However, on the flip side when we choose to spend money on one thing we are also sacrificing something else.


Budgeting is a tool to show you where your money is going and to have more control over what you are investing in. Often times we are unaware of what we are spending our income on. The budgeter has the power to decide where the money is spent, but we all know how the word “budget” instantly makes everyone cringe. If budgeting actually gives you more control over your finances, why do we all dislike budgeting so much? I can volunteer an answer, because it exposes your needs from your wants. When we decide to spend money on things we value, we are missing the part where we have to sacrifice the less valued option.  If we decide to go out to eat three nights in one week because of this or that celebration, we need to realize we might not be able to buy the new pair of pants we were planning on buying for work. Tracking your income and your expenses monthly not only requires you to determine what you value and what you need to sacrifice, but it also reveals where we are living above our means.

Three steps in starting a successful budget are:

1. Create a Financial Plan: Every person or family will have different goals financially, but before developing a budget it is crucial to create clear short term and long term goals. Short term goals will help determine categories in your budget and will be more specific than the long term goals. One example for a student’s short term goal might be to pay for school without adding any more loans to existing undergrad loans and start a retirement savings fund. A long term goal might be to pay off all your debt before buying a house.

2. Develop a basic budget worksheet: Calculate your gross income and start listing all your expenses. Start with your mandatory expenses (mortgage/rent, utilities, insurance, ect.). Next, begin to list your more flexible expenses (food, gas, cable, phone, etc.). Determine the amount you need to save versus the amount you want to put toward debt to meet your goals. If you are blessed enough to have extra after this, you have found your “fun money” to put toward entertainment, home décor, and eating out.

3. Track your spending: Somehow you need to track your income and your expenses daily, weekly, monthly. Finding a system you will actually use is key. Step 1 and 2 will be useless if you do not track your actual spending against what you have planned! There are so many websites and apps out there if a basic excel spread sheet does not work for you. Some examples are,,,  

Tory Kennedy is the Financial Literacy Coordinator for the Center for Pastoral Leadership.