What Does a Realistic Budget Look Like?

By Christopher Murray

| Photographs By Hill Street Studios/Hill Street Studios

Budgets are hard. And no matter how many times we’ve told you to start one, or recommended apps to help you stick to one, you still probably don’t follow a budget perfectly every month.

Why is that?

Well, the dozens of apps, spreadsheets, and other methods just don’t account for real life and all the expenses we don’t think of. There are plenty of expenses we have that aren’t monthly that take up more of our money than we planned.

So what do we do about this?

Well, instead of looking at what a budget should include, let’s take a look at what a budget actually includes:

Monthly bills: rent, phone, internet, insurance

The biggest part of your budget will obviously be made up of necessities like rent, your phone and internet bills, etc.

These are monthly bills that you need to include. They make up the bulk of your budget and take the most from your paycheck, and they’re important.

In any budget method or app, there’s a place for monthly bills. If you can lower your monthly expenses, you can save a lot for unplanned events. Here are just a few ways to consider:

Debt (when your budget allows)

If you went to college, you have student-loan debt. Chances are you also have credit-card debt, a car loan, and maybe some medical bills you haven’t paid.

But it can be hard to pay off a lot of high-interest debt all at once if you’re on a tight budget. So which debt do you possibly prioritize?

Well, there are a couple of paths you can take.

Pay off the lowest balance first (aka, the snowball method)

This is the best plan for those who need to see their progress fast. If you pay off the lower balance first, you’ll feel inspired to keep going.

Choose the debt with the highest interest rate (aka, the avalanche method)

This could save you the most money in the long run, but it could require larger monthly payments, and it will take a little longer to see you progress if you have a high balance.

Focus on your credit score

If you need to prioritize your credit score, you’ll want to focus on paying down your credit cards first. Paying down the ones you are near to maxing out will improve your score fairly quickly, if only by a few points.

Set up payment plans

While you’re focusing on one of these methods, it’s important to set up payment plans, even if you can only afford a few dollars at a time. That way, at least your lenders see that you’re paying something.

You’ll have a special place for debt in your budget, and know that if you ignore it, your credit will suffer. That’s why it’s best for you to come up with a plan, even if it involves just paying minimum amounts.

Nights out (because you will have them, even when you’re dirt poor)

The number-one thing financial professionals will tell you if you need to live on a budget is to cut out expensive nights out. But let’s be honest, if you’re in your early twenties, you’re going to go out, even when you barely have any money. You’ll probably forgo grocery shopping to pay for a few extra beers (I know I have).

So how do you incorporate unplanned bar tabs into your budget?

It’s pretty simple, actually. Set aside an amount each month … and be realistic. Don’t set aside $50 if you’re going to spend $100.

You can also try opening up a couple of different savings accounts—with one specifically for fun spending (in addition to an emergency fund, which we’ll talk about below). And for fun expenses, use cash. It’s an age-old trick—it’s simply more difficult to spend with cash because you can see it physically leaving your hand.

These combinations of things will help you, even a little bit, in spending a little less.

An emergency fund

I’m not going to lie; until recently, an emergency fund was the last thing I put money towards. That is, until I needed one and didn’t have one. When I suddenly needed a new car after my 1998 Oldsmobile finally kicked the bucket for good, I was left desperately wishing I had saved up some money.

This is why emergency funds are important, even if you save a bare minimum … it’s always better than nothing.

Check out apps like Digit, that automatically help you save just a few dollars at a time.

Things you don’t think about

You might think this is why you have an emergency fund, but there are also expenses you know you’ll have, but don’t think about until they come up.

For example, birthdays, Christmas, and car registration are expenses you should be able to plan for, theoretically.

The answer to this is to start saving at the beginning of the year, or at least partway through the year.

If you put aside $10 every week ($40 a month), you’ll save $480 by the end of 12 months to spend on Christmas presents.


If you have pets, you’ll need to include a portion of your budget for their food, vet bills, and all those dog toys they never play with.

Depending on the type of pet you have, the annual cost of ownership will vary, but you should set aside a couple of hundred dollars a year for unexpected expenses. In addition, you’ll need to budget their food into your own food bill.

Are there any apps that include all these expenses?

There are a lot of great budgeting apps if you actually use them. But that’s the problem, isn’t it? We just don’t continue to use the apps, for a variety of reasons—we don’t want to link our bank accounts, we get bored with the hard-to-use format, or we just get lazy.

In my personal experience, an app isn’t always the answer. Sometimes good old pen and paper works best, because it gives you a hand in your budget, and it’s more fun (if you do it right).

If you’re like most people and use debit and credit cards, you can easily track your spending through their apps and sit down at the beginning of the month (preferably while binge-watching something) and write out a budget. And the best thing about pen and paper? You can change your budget as you need to incorporate additional expenses. Apps can be frustrating because you set up your account once and it can be difficult to adjust for unplanned occurrences.


Everyone should have a budget, but very few people actually get around to doing it. That’s because there are so many expenses we don’t think of.

The answer: start thinking about as many of those unplanned (and planned) costs as you can. Do your best to set aside extra cash and lower your expenses where you can.

The views expressed in content distributed by Newstex and its re-distributors (collectively, “Newstex Authoritative Content”) are solely those of the respective author(s) and not necessarily the views of Newstex et al. It is provided as general information only on an “AS IS” basis, without warranties and conferring no rights, which should not be relied upon as professional advice. Newstex et al. make no claims, promises or guarantees regarding its accuracy or completeness, nor as to the quality of the opinions and commentary contained therein.

Licensed content is provided for informational purposes only, and is not intended to represent any endorsement, expressed or implied, by USAA or any affiliates.

This article was written by Christopher Murray from Money Under 30 and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.


How to Pay Yourself First and Grow ...


5 Foolproof Tactics to Overcome Impulse Buys


Year-End Financial Checkup for Military Members