How to Budget for Real Life and Actually Fix Things

Adam Estela
9 min readJan 17, 2021


“Having money isn’t everything, not having it is.” — Kanye West

Take Two Drinks if This Sounds Familiar

I’ve loved budgeting since the second grade. Yet decades later, instead of giving a TED talk on personal finance, I was staring at my budget trying to understand how two thousand dollars had disappeared. No matter how severely I restricted my spending or how precisely I tracked it my savings fell short. Money was uncontrollable, with every month bringing new, allegedly one-time, unexpected expenses. I couldn’t spend money for fun without the fear of needing it to cover my living.

How were these problems possible for a money-tracking budget-nerd like me? Shouldn’t a budget help me solve these problems then recede-quietly maintaining peace? Isn’t the goal to be more free? To enjoy a life no longer trapped and owned by money but one where money is an afterthought? If that isn’t possible then why budget at all?

That day when two grand vanished from my budget was the last day money controlled me. Instead of relying on what I knew about money I challenged myself to search for something better. For over two years now my budget has given me financial safety without any fear-nearly without any thought-about money. All my saving goals are met and I spend guilt free. What complex system of spreadsheets do I use to accomplish this? None. And I only spend 15 minutes a month budgeting.

Here’s my life changing budget-for any income level-and the tool I use to implement it.

Here’s My Budget

A life-changing budget still starts with the basics. I hope these first two categories are boring to you.

Fixed Expenses

  • Rent/Mortgage
  • Renter’s Insurance
  • Utilities (Your eyes are working, this is a fixed expense. Read below.)
  • Electric
  • Internet
  • Student Loan
  • Google Drive

Fixed expenses must be paid every month without exception and are a known fixed cost. Not paying these would invite debt collectors and an eviction notice.

Electric and utilities have become a fixed cost because of budgeting! They fluctuate month-to-month, but after a year I could calculate my average monthly expense. I budget the fixed average amount and let it ebb and flow through the year. Before I knew my average amount I guessed and adjusted as needed. Spoiler: the tool I mention at the end makes this effortless, unless you consider clicking a single button to be effort.

Living Expenses

  • Meals
  • Household Items
  • Personal Care
  • Pet
  • Gas / Parking / Transportation
  • Basic Fitness

These are expenses I expect to pay every month. They’re not a fixed cost, but they are predictable. Similar to electric and utility spending, many of these categories fluctuate. Again I budget the average so extra is always there when I need it.

Household items are things like garbage bags, cleaning supplies, and dish soap. Personal care can be toothpaste, shampoo, and cold medicine-things I’d generally find in my bathroom. Take out is any meal under $10 which I cover with budgeted grocery money. Separating the two allows me to observe where my food money is going.

Long-Term Living Expenses

  • Auto Maintenance
  • Medical Expenses
  • Household Maintenance and Fees (this includes apartments: pet fees, lease breaks, moving costs, and rent increases)
  • Credit Card Annual Fee

Last year the mechanic told me I needed $700 for new brakes and I didn’t even blink. Average car maintenance is $1200 a year, or $100 a month. Being honest about these long term expenses-and all budget expenses-avoids the heartache of unexpected financial setbacks. I made the choice to confront these expenses. Now they’re exposed on my budget unable to surprise me later.

When I made this category I tried to remember every long term expense I had. Of course I missed a few (not all of them are shown here) and that’s fine. The beauty of a budget is it gives me one place to record expenses whenever I’m reminded of them-pleasantly or otherwise-and then forget about them. This applies for every category in this budget. The budget grows and changes with me. It remembers what I need money for so that I don’t have to which makes it more reliable with adjustments to average spending and categories over time.

Unexpected Expenses

  • Misc.
  • Stupid Mistakes

Saving for unexpected expenses provides me with enough money to cushion my face palms. At first, I put $25 here every month. I lowered this once I had fleshed out my budget enough to trust it more. At the end of the year if there’s too much here I move some to saving.

Misc. covers little things that have no place being defined in my budget. When I changed jobs I needed $8 to fax 401K papers to my new employer. I needed $1.50 to print things at Staples when the apartment printer was broken. These are the real millennial problems. Who uses a fax machine?

Stupid mistakes are avoidable expenses that are all my fault like a speeding ticket or appointment cancellation fee.


  • Charities
  • Gifts for Others
  • Donations

For the past two years I’ve been prepared for Christmas by saving every month. I now enjoy buying big gifts that are a thrill to give without any financial setback in January.


  • Books
  • Coaching
  • Courses

By committing a relatively small amount of money to self-improvement I’ve been able to live a vastly more enriched life-doubling my salary, widening my perspective, and improving my mental health to name a few things. Recently I bought a Udemy course to develop skills for work, Waking Up with Sam Harris to practice meditation, and On Writing Well as a refresher for writing this post. By saving this money upfront, I never let a small lack of money prevent me from reading a book that changes my life or taking a course that increases my salary by thousands a year.


  • Emergency Cash ($1,000)
  • Emergency Income (3 months of expenses)
  • Wedding
  • New Car
  • New Clothes (Wardrobe maintenance)

With all of the previous categories filled I can confidently store money in savings that won’t be tampered with. To further resist tampering, money in these categories are kept in a saving account at a separate bank from my checking account.

Emergency income is a big safety net ensuring consistent monthly income in case of uncertainty; whether work schedules, paychecks, or job situations change. It can be a grace period that gives me the freedom to quit by choice, or peace of mind during layoffs. It was especially useful to me while I was freelancing. On surplus months I saved the extra earnings-for freelancing I saved 6 months-and on slow months I could still rely on a consistent income by withdrawing to make up the difference.

Guilt-free Money!

Guilt-free money is like fun money but on steroids. Fun money tends to get invaded by other spending. In this budget, with every previous category filled first, the money that makes it all the way to here is really, truly, completely mine. Nothing is coming for it and my conscience is clean.

Guilt free money is meant to be spent down to zero every month on anything I want. This puts my budget to the test-if I find myself pulling from guilt free money to cover other expenses or I don’t feel comfortable spending it down to zero, it’s a sign that something is missing in the categories above. Did I forget to make a savings goal for a concert coming up? Did I forget about someone’s birthday? It took a few months but as my budget became more complete, my guilt free money was protected.

This category should be locked at 5% — 10% of your gross income-mine is 5% because I earn a lot and am saving aggressively. This restricts how much can be spent to zero every month, allows me to save, and because it’s a percentage, it increases anytime I get a raise in a methodical way instead of letting a new salary get to my head and inflate my lifestyle.

But why restrict guilt free money? What’s left to save for after defining the entire budget above? I’ve written a few other articles on this that you can find at the end that talk about becoming truly financially independent and even retiring early.

Optional: Guilt-free Categories

  • Playing
  • Food
  • Entertainment
  • Shopping
  • Avocado Toast

Having one bucket of guilt-free money can work perfectly, but I want to pay special attention to some of my spending either to restrict it or to track and visualize it in a budgeting app. These can be however granular you want-whether you care to track all the way down to “Avocado Toast” if you’re desperately trying to restrict spending there, or keep it as simple as “Food”. Since the rest of the budget already has my back, there’s no need to track money here beyond what I care to keep an eye on for my own sake. I like to use the broad categories listed above so that when I feel like money is slipping away I can easily see where it’s been going. I pull money from my guilt-free bucket to cover spending in these categories since these are special sub-categories of guilt-free spending.

YNAB Makes This Budget Effortless

I’ve used dozens of budgeting tools and only one has ever worked: You Need A Budget (a.k.a. YNAB) Most tools fail because they’re either too rigid, which makes using them feel like a constant fight against real life, or too cumbersome which makes them error-prone. YNAB works because of these, among many other, features:

  1. can edit transactions that are incorrect or inconvenient-category, name, amount, etc.
  2. spending on credit is automatically saved in your budget so that its ready when you need to pay your bill.
  3. completely customize categories to fit any lifestyle, whereas most budgeting apps fail by trying to put people in a box.
  4. connections to banks actually work. If there ever was a connection failure or you didn’t want to wait for your bank, transactions can be added manually and will automatically be matched to the bank transaction when it’s pulled in.

I used to juggle Google sheets, Mint, and bank budgeting tools mostly without success. With YNAB I have one place to manage money that has worked for two years- and countless exceptional circumstances -without a single flaw.

These videos are everything you need to know to get set up:

Setting up YNAB took me a couple hours and I haven’t lost a single dollar, not to mention two thousand dollars, since using it.

A Budget is a Roadmap to Having “Enough”

When I created this I didn’t have enough money to fill every category, but that didn’t change the fact that I needed it. This budget gave me an honest view of my money for the first time which allowed me to make better decisions.

I focused on big changes to balance my budget. What good is saving $30 a month on lattes if I can save $500 a month in a different apartment? Or at a new job? This budget was my roadmap for making those changes.

Like a good roadmap it also showed me when I reached my destination-when I had enough. I avoided lifestyle-creep by defining what “enough” is and putting that in my budget as categories I couldn’t reach yet, or notes to increase categories to a certain amount. Instead of mindlessly inflating my lifestyle, I spend intentionally and save for bigger aspirations like early retirement and helping others around me.

Make your budget. Don’t let money be scary or heartbreaking. Express yourself. Add your dreams and make them real. And experience the freedom that comes from having enough.

Share this and I will love you. 💖

I don’t “make content.” I don’t sell anything. I wrote this from my heart to help others. Sharing is caring.