Personal Budget Review: 5 Steps to Peace of Mind

When your parents made you mow lawns all summer, they wanted you to learn that it is easier to save a dollar than to make a dollar.  Despite these collective lessons, we tend to focus on earning more rather than conducting a simple personal budget review.

Before you volunteer for overtime, take a miserable job, or pick up a side hustle, engage in some common sense reflection.  Having a realistic picture of your income and monthly spending is the first step to achieving financial peace of mind.

“Why can’t I keep track of my spending?”

“Why don’t my savings grow?”

“Where does all of my money go?”

Let’s find out! Splurging will be more fun when you know you can afford it.

Let’s keep this personal budget review very simple.

writing in a notebook

Some people love to complicate their personal budget review with spreadsheets, percentage guides, algorithms, folders/envelops and the like.  Some hire an expert to chart their financial course. I suppose this creates an added sense of control and security. The truth is that your budget should be simple and personal. 

Do not try to track every dollar.

You should have a general mental picture of your monthly spending. (We are going to use a monthly basis.) You should not need to reference your data or keep track on an app every time you buy a Twinkie.  If your personal budget is this detailed, it will be restrictive to the point of uselessness.  Your estimates do not need to be perfect as long as they are in the ballpark.

Don’t worry about percentages.

Regarding the percentage guidelines that you see everywhere, they are really pretty silly. Who cares if you spend more on LARPing than you do on your mortgage? (It is all about priorities, so don’t judge me.) What is important is that you are not in the red at the end of every month.

Single person or family budget?

This personal budget review will work for a single person or a family.  If your family unit is budgeting in concert, simply lump the incomes together and the expenses together.  You are working as a single unit.

We are going to simplify your personal budget review into five parts:

  1. Real income
  2. Fixed expenses
  3. Recurring costs
  4. Discretionary spending
  5. Personal budget reflection

personal budget worksheet pic


1. Determine your real monthly income: Your salary is deceiving you.

Personal budget review income 2
Photo by RobinHiggins

Stop thinking about your salary figure or stated wage; this is what leads people to ask, “Where does all of my money go?” The most important aspect of this personal budget review is that you cannot base your spending on your gross income.  

Depending on your situation, you will never see a large part of that gross income.  City wage tax, social security, union dues, pre-tax contributions, and the like make your paycheck whither like a slug in a salt mine.

Figure out your weekly income and multiply it by four.  This is your real income.  Be conservative and do not include occasional windfalls.

Example: $400 take-home pay per week = $1,600 a month

But what about the money that I get back?  What about the fact that there are 52 weeks in a year and not 48? What about bonuses?

SILENCE! You impudent peasant! Forget about all that.  You should act as though your tax return and those extra weeks of pay do not exist.  We are keeping things simple and living below our means.  That extra money is still yours, but we should not include it in our basic monthly budget.

2. Fixed expenses: no room to wiggle

personal budget review house payment

These should be the heavy-hitters of your monthly budget.  It is true that you could move to a cheaper dwelling, refinance your mortgage, get a roommate, increase your insurance deductible, etc.  However, until you make a long-term change, these expenses are fixed.


  • Mortgage payment or rent
  • Utilities
    • Heating
    • Electricity
    • Water / sewer
    • Garbage
  • Taxes (might already be in your mortgage payment)
  • Insurance (might already be in your mortgage payment)
  • Homeowners Association fees
  • Maintenance / repairs (yearly estimate divided by 12)

Health care

  • Insurance premium(s)
  • Urgent care costs (yearly estimate divided by 12)
  • Vision / dental (yearly estimate divided by 12)
  • Deductibles (yearly estimate divided by 12)
  • Medications


Educational expenses (ongoing only)

  • Tuition (yearly estimate divided by 12)
  • Books and materials

Legal obligations (court-ordered payments)


  • Public transit
  • Ridesharing services
  • Personal vehicle
    • Car payment
    • Car insurance (yearly estimate divided by 12)
    • Warranty (Don’t do it!)
    • Gas estimate
    • Parking
    • Maintenance / repairs / renewals (yearly estimate divided by 12)

Debt repayments (not including home or car payments)

  • Student debt
  • Other loans / repayment schedules (Do not include revolving debt like credit card payments.)

Example: Let’s say that these fixed expenses add up to $1000.  There is now $600 left in in our hypothetical personal budget review for recurring expenses and discretionary spending.

3. Recurring costs: moderate wiggling

gym membership

These are monthly costs that can be adjusted but, nevertheless, they take money from your bottom line every month.  You do not get to decide on the spur-of-the-moment if you will pay or not.

Groceries (the absolute minimum cost for the household basics)


  • Mobile
  • Home


  • Fitness center
  • Clubs
  • Lessons

Pet care

  • Food
  • Medications
  • Boarding
  • Grooming

Additional insurance (Do not include car or home.)


  • Print
  • TV
  • Internet
  • Music services
  • Websites

Personal care (basic haircuts, etc.)

Example: For our hypothetical example, let’s say that our single, imaginary friend spends $500 on groceries, haircuts, wireless, etc.  Now there is only $100 left for discretionary spending. (We are cutting it pretty close!)

4. Discretionary spending: maximum wiggle

These costs can be completely eliminated from a given month without serious repercussions.  (Of course, you better get your spouse something on their birthday and show up to work with shoes on.)

Charitable donations

Personal care upgrades (spa treatments, manicures, etc.)

Grocery upgrades (what you spend in addition to the bare minimum)


Special events 

  • Concerts
  • Plays
  • Sporting events
  • Other:

Eating out

Non-food shopping (clothes, tools, hobby supplies, etc.)

Example: Our hypothetical friend only has $100 left to spend.  They might want look for ways to improve the line items of their personal budget review.

5. Drawing conclusions from your personal budget review:

Now that you have crunched the numbers of your personal budget review, you should have a pretty good idea whether or not you are spending too much every month. Your results may range from “I am doing great, and I can relax,” to “I can do better,” to “I need to make some tough decisions.”

What if I have a deficit?

Woman freaking out
Photo by RobinHiggins

Go back through all of the line-items of your personal budget review and find the savings.  A few small tweaks might make the difference.


You do not necessarily need to sell your house or move to another state to save on housing.  Unplugging the extra refrigerator, adjusting the thermostat, or improving insulation might be enough.

Related post: 11 Ideas on Using your Home to Make Money

Health care

This is a tough one.  Changing plans or requesting generic medications can only take you so far.

“How to Shop for Health Insurance” from the Wall Street Journal


Anyone with children can tell you how hard it is to find great childcare and how expensive it can be.  Nevertheless, taking the time to explore options might make a huge difference.

“37 Ways to Save Money on Childcare” from DoughRoller

Educational expenses (ongoing only)

The best way to pay for ongoing educational expenses is to avoid debt as much as possible (There is no such thing as “good debt.”)  Unfortunately, saving on ongoing education costs requires thought, time, and effort.

Tuition Saving Tips from FastWeb


Cars pose many dangers, and some of them are financial.  Have as few cars as possible and drive the most modest car that you can.  Do not be afraid to downgrade your vehicle even if you still have a payment.  If you live near public transportation, use it.

Related post: Cheapest Car Ownership Strategy


Grocery costs are very flexible.  You do not need to become an extreme coupon-er or eat nothing but beans and cornflakes to save.  Changing where you shop or regularly buying the right staples could create significant savings.

Related post: Money-saving Grocery List

Related post: Is Aldi worth an extra trip?


Do you really need a home phone?  Do you really need unlimited data?  Do you really need phone insurance?  Did you know that you can spend less than $30 a month and still have a smartphone?  My two favorite options are Verizon prepaid and Google Fi.

Related post: The Cheapest Way to Have a Smartphone


Be selective. Determine which membership is the most important to you. Which one gives you the most? Could you find a cheaper alternative? I switched from LA Fitness to Planet Fitness and saved a tidy sum.  (My glutes did not notice the switch.)

Pet care

You want to give your pets the best, but maybe you can spend a bit less.  One way to save on boarding is to make a reciprocal agreement with another pet owner that you trust.  Another way is to save on pet food: investigate the ingredients and you might find that premium brands are really charging you for advertising and a fancy package.

Additional insurance (Do not include car or home.)

Insurance can be a real scam.  If everyone simply stopped paying premiums and put that money in their pockets, they would have more money (collectively) than ever gets paid in claims.  100% of people on life insurance policies never saw a dime of that money. (Don’t talk to me about policy equity; that is also a scam.)

Whenever reasonable, save the money in a special account and avoid paying premiums.  (For example, an “apartment stuff savings account” is better than paying for renter’s insurance.)

“10 Things Life Insurance Agents Won’t Say” from MarketWatch


Review all of your TV, internet, music, and print subscriptions and thin the herd.  Cut down on the number of subscriptions, and get more out of the subscriptions that you keep.

Related post: Spend less on TV: How to survive cutting the cord

Related post: Get the Most from Your Public Library

Personal care 

People who have seen me in person are not surprised to learn that I cut my own hair.  (Hey, more money to spend on hats.)  Fancy salons and spa treatments are luxurious treats, but do not convince yourself that they are essential.

Charitable donations

I do not want to discourage anyone from charitable giving, just make sure that you are giving within your means.  You will not be helping people very long if you ruin your finances.  Keep in mind that giving your time and effort might be more meaningful.


If you are a giving person, gifting is one of life’s joys, but spending more is not always the best option.

Related post: Best Homemade Gifts for Adults

Special events 

Do not let FOMO destroy your long-term goals.  If you get carried away buying tickets, you might be missing out in the long run.

Related post: Top 20 Free Things to Do in Philadelphia

Related post: Reducing the Costs of Fun

Eating out

Some people state, “I do not cook.”  Their tone reflects immutability, as if they were saying “I cannot dunk a basketball,” or “I am from Idaho.”  Refusal to do more cooking at home is just stubborn laziness.

Related post: Reducing Your Coffee Habit Costs

Related post: Homemade pizza simplicity


Shopping is not a hobby, passion, or a past time.  If you think shopping is essential to your psychological well-being, something is wrong there.  Find more meaningful thrills in your life and go beyond consumption and materialism.

Related post: Insights into Willpower and Spending

Related post: Thrift Store Tips to Become a Jedi Master of Resale

Winning at personal finance:

Happy woman celebrating
Photo by RobinHiggins

Keep going through your personal expenses list, prioritizing, and researching until you are satisfied with your results.  Revisit your budget from time to time to update your costs.

Once you have a comfortable monthly surplus, you can afford to pay down debt, build your emergency fund, make investments, or be more generous.  Perhaps you can simply feel good about treating yourself to something special. Most importantly, you can have financial peace of mind.

Please leave a comment with tips from your personal budget review.

One thought on “Personal Budget Review: 5 Steps to Peace of Mind

  1. VERY comprehensive! Also to be considered: yard upkeep – do it your self, just keep it tidy, ALL all the rest is unnecessary;

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