Broke-ish to Functioning: Step 4
Updated: Oct 1
Making a Realistic Budget
Start here if you haven't read the introduction:
Download a Basic Budget Google Sheets
Download a full Personal Finance PDF
This is one I struggle with a lot, and I’m willing to bet I’m not the only one.
You sit down feeling motivated, open your budget, and type:
Groceries: $400
Meanwhile, you know damn well you have been spending somewhere around $800–$900 a month on food.
Then halfway through the month, the grocery budget is gone, you feel like you failed, and suddenly budgeting feels impossible.
The problem is not always that you suck at budgeting.
Sometimes your budget just wasn't realistic in the first place.
Stop Budgeting for the Person You Wish You Were
This is probably one of the biggest mistakes we make.
We build a budget around what we think we should be spending instead of what we are actually spending.
If you normally spend $800 a month on groceries, suddenly telling yourself you are only allowed $400 probably isn't going to magically make you a completely different shopper overnight.
Could you eventually get there?
Maybe.
But first, we need a budget you can actually live with.
Option 1: Give Yourself More Room and Work Your Way Down
If you honestly have no idea what a realistic grocery number should be, start higher than you think you need.
If your first instinct is:
“I should probably only spend $400.”
Try giving yourself more room while you learn your actual habits.
Then spend the next two or three months becoming more intentional with how you shop.
Start using:
Grocery lists
Coupons
Store rewards
Cashback apps
Sales
Meal planning
Comparing prices
Buying things, you will actually eat instead of things your fantasy healthy self thinks you're going to eat
Track what happens.
After a couple of months, you will have a much better idea of what your household realistically spends.
Then you can start bringing that number down.
Option 2: Let Your Bank Account Tell You the Truth
This is probably the easiest option.
Open your banking app and look at what you actually spent at grocery stores over the last two or three months.
Add those months together and find the average.
For example:
Month 1: $760
Month 2: $835
Month 3: $805
Your average is about $800 per month.
Instead of creating a $400 grocery budget because that sounds responsible, maybe you start with something like $900–$950.
Yes, I said higher.
Add a little breathing room — maybe around $100–$150 depending on your household and spending patterns.
Why?
Because groceries fluctuate.
One month you need toilet paper, laundry detergent, dog food, spices, cleaning supplies, and every other expensive thing in the house at the exact same time.
A realistic budget needs room for real life.
Once you consistently come in under that amount, then lower the budget.
Option 3: Set a Hard Budget and Stick to It
There is another option.
Create the budget you want and do everything in your power to stay within it.
Meal plan.
Shop sales.
Use coupons.
Skip unnecessary extras.
Track every dollar.
For someone who is extremely disciplined, this can work.
But...
Let's be honest.
If discipline was already our greatest strength with money, we probably wouldn't be reading a series called Get From Broke-ish to Functioning.
If you try the strict-budget method and you are constantly frustrated, stressed, running out of groceries, or not eating enough because you're terrified to go over budget...
Stop.
The budget is supposed to help your life.
Not make you miserable.
Go back to Option 1 or Option 2 and build a more realistic number.
And This Isn't Just About Groceries
Use this same strategy for anything that changes from month to month.
Pets
Don't just randomly decide:
“I'll budget $100 a month for the dogs.”
Okay...
But what have you actually been spending?
Look back two or three months.
Food.
Treats.
Medications.
Flea and tick prevention.
Cat litter.
Random pet-store trips.
Whatever regularly comes out of your account.
Average it.
That is your starting budget.
Gas
Do the same thing.
Look at the last few months of gas purchases.
Average them.
Give yourself a little buffer.
Do you have any trips coming up, or extra days you are out of the house?
Download the Upside app
Use Referral code: 9A9BK
Household Supplies
Cleaning products, paper towels, toilet paper, laundry detergent and all of those random household purchases count too.
If they are constantly blowing up your grocery budget, you may even want to create a separate category for them.
Your Budget Is Allowed to Change
Your first budget is not carved into stone.
You are learning.
Month one might tell you that $600 for groceries was completely unrealistic.
Month two might show you that $850 works.
By month three, maybe you figure out how to comfortably bring that down to $750.
That is progress.
A budget is not supposed to be a punishment.
It is supposed to tell your money where to go while still reflecting the life you are actually living.
Start with reality.
Then improve it.
Your Turn
What category do you ALWAYS underestimate when you make your budget?
Groceries? Eating out? Pets? Gas? Amazon?
Drop yours in the comments — because I know I'm not the only one who has put a completely fictional grocery number into a budget and hoped for the best. 😂
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