How can I come up with a good personal (daily) budget?

Question

I've read a bunch of posts about how to create a portfolio, investments when starting out on your career. I know that a lot (almost everyone) goes through the same kind of things that I'm going through now, but my specific question is:

How can I come up with a good personal (daily) budget that can reduce my anxiety?

Today I woke up late and so had to grab breakfast at Dunkin Donuts and I felt really bad about spending the money there when I can make it at home for cheaper. But then I rationalized it that I can afford to spend $8/day on food. But then another part of me says: True, but I was thinking of joining a gym and that is more costs, so I really should try to make food myself as much as possible.

Ideally I'm looking for a step-by-step guide to creating a personal budget so that I can feel more comfortable making purchases and knowing exactly what I can and cannot do and feel good doing it.

Answer 1

A Budget is different for every person. There are families making $40K/yr who will budget to spend it all. But a family making $100K of course will have a different set of spending limits for most items.

My own approach is to start by tracking every cent. Keep a notebook for a time, 3 months minimum. Note, for homeowners, a full year is what it takes to capture the seasonal expenses.

This approach with help you see where the money is going, and adjust accordingly. The typical goal is to spend less than you make, saving X% for retirement, etc. The most important aspect is to analyze how much money is getting spent on wasteful items. The $5 coffee, the $10 lunch, the $5-$7 magazines, etc. One can decide the $5 coffee is a social event done with a friend, and that's fine, so long as it's a mindful decision. I've watched the person in front of me at the supermarket put 4 magazines down on the counter. If she has $20 to burn, that's her choice.

See Where can I find an example of a really basic family budget? for other responses.