preschool girl on bike with training wheels on a country path on her way to school

A Simple Three-Step Budget That Can Change Your Life

Budgets are like training wheels: they help you get moving and offer you confidence as you learn how to balance.

Secrets of Successful Budgeting

I wish I could come up with a better word than “budget” for managing money. While I’ve made peace with the word, it still conjures up synonyms like whip, drudgery, and cruel master. Personally, I prefer the more elegant term Spending Plan, but for now, because budget is so universally understood, let’s just go with it, all preconceived notions aside.

No Budget is Fail-Proof

Search “how to budget,” and you’ll get a list of options a mile long. While there are many ways to budget, none is perfect. A budget is a tool you develop to fit your lifestyle. There is no single, guaranteed budget method, form, or spreadsheet.

Even a template or financial software that fits your temperament and lifestyle is not guaranteed to change your life any more than power tool sitting on the garage shelf will not put together that new wall unit for you while you kick back and play on  your phone. You have to do the work.

Budgets are extraordinarily useful, a lot like training wheels. They can help you get going and give you confidence as you learn to balance. There may come a time that you’ll become an expert “cyclist” and outgrow your need for the training wheels. Or you may want to leave them on for confidence and security should you hit a bump in the road.

No One-Size-Fits-All

There are probably as many ways to budget and different kinds of templates, forms, and budgeting software out there as there are financial temperaments. And rarely do those kinds of fill-in-the-blank templates work because all of those categories, percentages. and pre-loaded numbers reflect someone else’s situation, income, and lifestyle. That makes them doomed to fail in most situations.

The only way a budget will ever work for you is if it reflects you. The categories and numbers in those categories must match how you live your life.

Budget of Choice

Of course, I am referring to my choice, but I’m confident this simple three-step budget can work for anyone in just about any situation.

1. Create categories

Start with the obvious ones like Housing, Food, and Gasoline. Expand your categories to reflect your life.

2. Give every dollar job to do

Look at your paycheck or another source of income. Your job is to manage that money—every single dollar. You do that by giving every dollar a job to do. You do that by pre-spending your entire paycheck on paper before spending any of it. Think of yourself as the boss, and those dollars are your employees. A good manager knows where the money is supposed to go and then follows through to ensure every dollar went where it was supposed to. That’s a budget.

3. Every month starts over at $0

Call it a zero-balance budget. It means that since every dollar has a job to do, at the end of the month, every dollar should have done its job and been spent, saved, or otherwise set aside by moving it out of the checking account. Theoretically, that brings your household bank account to $0. And if, for some reason, you didn’t budget exactly right, and the account has some money left in it, decide ahead of time where to move it so that the balance does return to $0.

Let’s Review

A budget where you 1) create your categories 2) “pre-spend” every dollar by assigning it a job to do, then supervising with a careful eye to make sure they do as told, and  3) starts over at $0 every month is a budget that will push you to develop new habits and routines.





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10 replies
  1. NATNAT KING says:

    Yes well said Mary, take Credit only where Credit is due, and I remember reading your tips and advice back in 1992 so thank you, those same tips and advice are still assisting me today 🙂

  2. Tammy Myers says:

    The most life changing book (other than the Bible) I ever read as a newlywed in 1996 was your book “The Best of the Cheapskate Monthly”. If any of you have not read this, it is timeless information that will change the way you see money. It changed my life and I have not gone back ever since! Thank you Mary!

    • Mary Hunt says:

      Thanks for this review, Tammy! And oh my, that was my very first book, published in 1993. Wow. It’s still in print but not easy to find. It’s small, mass-market size (like a Harlequin Romance). The content has not changed because it is based on principles and truth that are unchanging. Since then, I’ve written 25 more published books. For anyone reading this who might be interested, a subsequent book Debt-Proof Living has all the contents of this book Tammy refers to, plus the 2nd book, Money Makeover … all in one. And it’s readily available. We used to sell books on my websites, but we just cannot compete with Amazon. So I would point you there to find those books. And you can go to Books by Mary Hunt to see many of them in one place.

  3. tom mook says:

    Your budget concept seems like a direct off-load of Dave Ramsey’s “Every Dollar” program. An excellent program for budgeting, no matter who gets the credit. Keep ’em coming, and thank you for all your great ideas and suggestions. I’m constantly passing them on to others.

    • Mary Hunt says:

      I appreciate the good work that Dave Ramsey has done. However, this concept first appeared in Cheapskate Monthly Newsletter, which I founded in 1992—predating Mr. Ramsey.

    • Jenny says:

      Thank you for your hard work in helping us become better stewards with our finances. I didn’t realize you had crafted that concept in 1992. And Tom, like Dave, maybe better manners are in order! 😉

  4. Kitti says:

    I highly recommend YNAB (You Need A Budget). Does most of what Mary recommends, especially the ‘give every dollar a job’ concept.

  5. Maria says:

    Dear Mary,
    Years ago you were instrumental in helping us create a budget for life. We followed your budgeting and Freedom account recommendations as you explained in The Complete Cheapskate. Mary, it had such a positive effect in our finances that I really feel indebted to you for helping us be where we are today, very well financially equipped now that we’re retired. Thank you so much for your help!

    • Mary Hunt says:

      Thanks for this awesome feedback, Maria. I am so proud of you for not only hearing, but also “doing” by these principles to work in your finances!


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