Where to Start When You're Clueless About Money (Step 1: The Budget)

Welcome to the first step in the Base10 Basics series. In this series we'll walk through 10 important steps to build a robust financial foundation. We'll start here with creating our first budget and end with ensuring our future retirement is sufficiently funded. We'll also dive into more personal philosophies on the balance of health, wealth, time, education, and thinking about the next generation.

Follow along from Step 1 or find the step most applicable to you at the Base10 Basics page. I'm glad your here and your future self will be too.

Let's remember when we finally landed our first full-time job and got our first paycheck (or maybe a nice signing bonus). What was the very first thing you did with that money? Did you #TreatYoSelf? Pay off debts? Invest? (I personally treated myself to a new Rear Motor Mount for my 2016 Ford Fiesta ST, zoom zoom)

Prior to that, most of our expenses were probably covered one way or another. Maybe by our parents covered general expenses and scholarships or student loans for room, board, and tuition. Some of us worked a part-time job in high school or college, earning what was basically just fun money.

A full-time job is a big change here. And that's a good thing. Working full-time can provide a significant amount of financial stability. But we need to know where our money is going before we can start making more tactical decisions with it. Tracking money coming in and out of our lives and planning for the future is the exact purpose of a budget.

At Base10 Finance, we focus on optimizing how we allocate and spend our money, no matter where we are in life. And that starts with the real beginning: The Budget.

Baby's First Budget

For many of us, our first “budget” was a quickly thrown-together spreadsheet with whatever expenses we could remember and our monthly income. We’d slap a positive green “Net Income” cell at the bottom and think, "Huh, it's not red. That’s good!"

Fast forward a few months, and we haven’t opened it again since the day we made it.

If this sounds like you, we are one in the same and you're in good company!

While that kind of snapshot can be useful in the moment, it’s not enough to build long-term financial stability and a plan for the future.

A Good Budget Is Grounded in Truth

A good budget should help us answer three key questions:

1. What are our true expenses?
2. What is our true income?
3. What are our true goals?

A good budget grows with us. It will change as our income, expenses, and goals evolve over the years. That’s not just okay, it’s necessary. Life isn’t an unchanging spreadsheet (be a lot easier if it was...). Expenses come and go. Income (hopefully) goes up. Goals evolve.

Our budget is a dynamic map. It tells us where we are, where we’ve been, and where we want to go. It helps us make better decisions.

Tools to Get Started

There are some excellent free budgeting spreadsheets online, but there are also powerful (and yes, paid) tools that make the process smoother. Here are two of my top recommendations:

• YNAB (You Need A Budget) ← This is a referral link*
• Monarch

*YNAB comes with a free 34 day trial, and if you use the referral link, we both get an additional free month when you subscribe.

You might be thinking, “Why should I pay for a budgeting tool? Shouldn’t I be trying to lower my expenses?” Fair question!

But here’s the thing:
What gets measured gets managed.
Reducing the friction in tracking your money helps you make better choices over time.

YNAB (You Need A Budget)

YNAB claims the average user saves $600 in their first month and $6,000 in their first year. Speaking from experience: it's true.

If you're starting from scratch, dealing with credit card debt, or just want to take control of your money, I highly recommend starting with YNAB. Their approach is conservative, goal-oriented, and designed to help you build real financial security.

You'll become very familiar with the term "YNAB Poor" if you use the program for long enough. It's a crazy phenomenon that when you start laying out and looking at your income and expenses in a certain way, you can have more money, but feel poorer, but in a good way. Seeing $200 assigned to groceries is different than seeing $4000 in your account while grocery shopping. It makes you more conscious of where you are spending your money and how much you are spending. The data may surprise you after a few months.

Finally, their “Age of Money” metric is also a subtle but powerful tracker of your financial stability. It's automatically calculated in the background so you don’t have to overthink it.

YNAB also has an amazing suite of guides and videos** to guide you step-by-step on how to set up and manage your budget effectively with minimal amount of time each week or month. They also have a killer mobile app! iPhone and Android

**My original intention for this post was to make a guide on how to set up a budget, but the folks at YNAB have done such a great job with their guides and videos, that I don't think it's necessary to add or take away from anything they've created.

If you still need more help, please reach out. I have been using YNAB for over 10 years and enjoy teaching people how to use it. (And yes, I have really tracked and accounted for every single purchase I have made since I was about 15 years old.)

Overall, I prefer YNAB due to my familiarity with it, their overall budget philosophy, and they have a significant business history and user base.

Monarch

I tried out Monarch for about a year and a half, just to see if there was an even better and newer option than YNAB out there.

Monarch really shines with it's "rules" for assigning categories to income and expenses automatically as they are posted to your accounts. It was incredibly easy to auto-categorize everything. However, this made me feel disconnected with the budget overall. Auto-categorize quickly shifted to auto-pilot and I lost the desire to check in on things.

Additionally, the YNAB Method leans heavily on "Give Every Dollar A Job" that can really anchor your budget in reality. Whereas Monarch is a more "traditional" budget program that relies on forecasting income and expenses into the future. YNAB focuses on what you have now.

Start Here

If budgeting feels overwhelming, don’t worry. This is just the first step and the most important one.

You’ve already taken it by reading this.

Try YNAB or Monarch this week and get your true numbers on paper. Don’t overthink it! Just start!

Next up: Master the Basics Before You Maximize Returns (Step 2: The Essentials)