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A healthy budget is a healthy wallet.

Not living paycheck to paycheck means enjoying life more.

One of the most stressful parts of our lives is dealing with finances. Many people grow up without solid financial role models in the home, and without schools teaching personal finance. Debt has become the new normal. The “Perfect Credit Score” the thing to pursue.

If you don’t know what you’re doing, it can be easy to dig yourself into a hole that becomes harder and harder to get out of. If you don’t have breathing room within your financial situation, your stress levels can go through the roof as you deal with living paycheck to paycheck and the uncertainty that comes with it.


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Take Inventory

  1. Make a list of all the accounts you have. Checking, credit cards, retirement accounts, mortgage, lines of credit, everything you can think of.
  2. If you have debt, total it.
  3. If you have assets, total those.

First off, if you don’t have an Emergency Fund of at least $1,000, make getting one your first goal, before even paying off debt.

Okay, now that you have a rough idea of your assets and your debts, we’re going to make a budget.

Bills + Living Expenses + Debt

I like to separate out my budget by Bills, Living Expenses and Debt. Go through your last few month’s statements and separate recurring transactions into the below categories.

  • Debt: Anything you owe that can eventually be paid off. (Credit cards, personal loans, a line of credit with a balance, a mortgage.)
  • Bills: This is something that recurs that you won’t be able to just pay off. (Utilities, car insurance, internet, phone bills.)
  • Living Expenses: These are things that are essential for making life possible and good. (Food, gas, gym membership, Netflix, eating out.)

I like to line-item these in excel for each separate expected transaction. The only exception to that is gas and groceries, I usually lump those together into monthly totals for each and divide the total across the number of paychecks we recieve.

Creating Margin - Finances starts with a budget

Sample Monthly Budget

Take Stock

Now that we have your list of recurring transactions, let’s take a closer look at where your income is going.



  • Total up your minimum payments. What percentage of your income are you sending into some fat-cat Wallstreet type’s pockets instead of your own?


  • Average your bill payments. What percentage of your income are you spending on utilities and other necessities?

Living Expenses

  • You know the drill. Over the past few months, what percentage of your income are you spending on Gas, food, netflix, etc?


Analyze the Results

Are you near 100%? Over 100%, so spending beyond your means?

Take your full net income and for each of the months you found your average transactions, see how much buffer you have left. (Income – all expenses (Debt + Bills + Living Expenses))

How comfortable are you with that number? If you’re like me, that number is probably uncomfortably high and likely explains why I had trouble falling asleep after a particularly grueling day at work.

If I get fired tomorrow, how are we going to make ends meet?

That was an all too common refrain in my head as I lie in the dark trying to coax sleep to come. It’s no wonder I didn’t fall asleep until 3 or 4 in the morning some nights.


Trim the Fat

Alright, now that we have the list of recurring transactions, and we likely want to reduce what’s going out the door. It’s disheartening to see a nice fat paycheck for all of a few hours before it leaves to fill someone else’s pockets.

Let’s take a hard look at those transactions.

Are you eating out a lot?

Do you have a ton of Target transactions but you can’t think of what you bought from Target recently? 

Do you have a high number of debts and you’re now realizing that the minimum payments make up a large chunk of your take home pay?

Are there a lot of impulse purchases?

Or, like my husband, lots of small purchases for sodas at corner stores?

Does any section of your budget seem inflated compared to the other categories?

Here are some cost-saving measures I’ve used the past few months:

  1. Cut up or lockup your credit cards. Do not carry them on you.
  2. Close off rooms that don’t need heated all the time. Close all vents inside of the rooms and shut the door.
  3. If you have a garage heater, turn it off if no one is spending time in the garage, or if the weather is warm enough for the garage to heat on its own.
  4. Use natural light during the day instead of turning on lights.
  5. Limit trips into town. Plan all your errands into one trip to save on gas and opportunities to spend money.
  6. Stay away from “trigger” stores, like Target, Costco or World Market. Identify what your particular trigger stores are.
  7. Meal plan, shop your pantry/fridge/freezer first, then go grocery shopping and only buy what is needed from your grocery list.
  8. Use a 30-day wait list to combat impulse purchases. Add the item, the cost and the date you wanted to buy it. If you still want it after 30 days, put it in your budget.
  9. Make coffee or iced tea at home to take with you out of the house. Keep extra coffee in a thermos so you don’t get tempted to “fill up” at a coffee shop throughout the day.


So we’ve put together a rough budget based on previous spending habits. We took a look at where we think we can trim the fat. Now we’re going to put together a budget for next month.

Take your rough budget as a starting place. Now, adjust your budget based on the trimming we identified. Tighten that belt as far as you think it will go. If you’re unsure about some items as they vary slightly, use the highest number you’ve seen to date. It’s always better to estimate high and come in low than the other way around.

Now, adhere to that budget for the next month. I like to create a mini-budget for each paycheck that comes in, to make sure we’re still on track with the larger monthly budget. I make sure that I see what dates the paycheck has to stretch to using my Monthly Budget (above), and make sure I have the money allocated in the paycheck budget. If one paycheck is a little short, I’ll split a cost across more paychecks (prior to the due date, of course) like with the mortgage – that is split across 3 paychecks to make it a little easier to pay down debt.

ANYTHING leftover from each paycheck rolls into my debt snowball (see the Debt row at the bottom). This is called zero-budgeting and is a fantastic tool for paying off debt.

A healthy budget is a healthy wallet.

Part of a good budget is allocating each paycheck to the penny.

For more in-depth information on Budgeting and getting out of debt, I highly recommend Dave Ramsey’s Total Money Makeover and the Total Money Makeover Workbook if you want to go really in-depth and really hammer that debt straight outta your life.

I have a couple more things I think are helpful to keep an eye on in order to see you’re really winning the Financial Margin.

Calculate Net Worth

At the top of this exercise, we totaled up all of our debt and all of our assets. Now it’s time to find your Net Worth.

Net Worth = Assets – Liabilities (debts)

When I started tracking this in November 2017, my net worth was at ($22,000). That’s NEGATIVE 22k! I was bowled over.

Now, my net worth is something I track every month and throw into excel to see a nice trending line that is getting closer and closer to 0 (we’re at -$2100) and will soon be in the positive!

Net Worth is a really good indicator of your financial health AND it’s easy to figure out and track over time. Not to mention, it is super motivating to watch that number climbing up and up and up!

What is your Savings Rate?

Another good indicator of overall financial health is the amount of money you save for yourself (retirement, future plans, a dream bucket).

If you contribute to a pre-tax retirement plan, take your Gross income minus that pre-tax amount. What percentage are you saving?

If you save post-tax, take your Net income minus the post-tax savings amount. What percentage are you saving there?

You want to get this rate to at least 15% for retirement accounts, the earlier the better, to allow time for your money to grow using compound interest. Dave Ramsey has more detail on this in his book.

What is leftover?

How much is leftover in your budget?

Income – (Bills + Living Expenses + Debt)

This is your margin. However, if you have debt, that margin can feel super, super small. If you have debt, use this leftover bit and make a debt snowball. Smash it into your smallest account. Roll that small account’s normal payment up into your snowball and smash it into the next smallest account. Repeat until debt is no more. Dave Ramsey has more detail on this in his book.

How do you make the “leftover” space (the margin) even larger?

  • Create more financial wiggle room by cutting costs.
    • Sell unused items around the house
    • Determine needs vs. wants and only purchase if it is a need
    • Eat at home
  • Raise your income.
    • I went from making $40k in 2012 to over $80k in 2018 through personal development and skill enhancement for my day job. (I learned SQL Querying on the job in a stepping stone position, once I proved myself with SQL, I was able to take on a more challenging position that utilizes that skill daily.) Plus, I can sign on for as much OT as I want, which helps pay off debt. I’ve been pulling 10-11 hour days and 7 hours on the weekend since the beginning of 2018.
    • Took the Dream Job course by Ramit Sethi and focused on being a top performer.
    • Took the Secrets of a Six-Figure Upworker course by Danny Margulies and was able to successfully find a client within just a couple weeks for a short term job, but then found a second client for long term work. I’ve now been working with that second client for over 2 years now. I know if I needed or wanted to, I could ramp up this side hustle and sign on more clients relatively quickly. I only earn $16/hr right now, but that’s easily scale-able (which I learned in the course).
    • Any number of side hustles out there can boost your income too!

More resources

There’s a ton of resources out there. Pick one and make it happen!

What are your current financial goals? Getting out of debt? Saving for something great? Retiring early? Let me know!

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