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5 Budgeting Basics for People Who Hate Budgeting

01/24/2014 01:44 pm ET | Updated Mar 26, 2014

When I was in grad school, I borrowed as much money as possible so that I could spend it on fun things, like clothes, the perfect Halloween costume (this seemed very important at the time), wine, a new iPhone -- you get the idea.

It was awesome. I had free money coming in all the time, and it was more than enough to support my cushy lifestyle. I saw no reason at all to track my spending or responsibly manage my money (I think you see where this is going).

Before I knew it, grad school was over, as was the six-month grace period I was granted to avoid repaying my loans. Up until that point, I hadn't given any thought to how I was going to budget, well, anything. The days of calling my father and frantically (and might I say, embarrassingly) begging for money were long gone. So when I got my first student loan bill requesting a $1,000-plus monthly payment, it seemed like my life was over.

If you're wondering if I somehow found a way out of this, the answer is no. I still make the loan payment, and I'm going to for the rest of my life. The good news is, it got a little less horrible after I figured out how to budget.

Even if you don't have a bunch of student loan debt like I do, it's still a good idea to budget so that in the event of an emergency or major life change (think: job loss, job change, unexpected medical disaster), you're prepared. Don't be scared -- it's totally fine if you failed econ in college and even better if you're completely Excel illiterate. These five tips will get you started.

1. Begin with a simple formula.

Factoring in each individual glass of wine or block of cheese will likely drive you insane (or to depression -- once I saw exactly how much cheese I was eating, it was a real eye-opener). There is no need to do this. To keep it simple, start with an easy, basic budgeting formula: Your monthly income minus your monthly bills and expenses. The difference is what you can spend on everything else, like clothes, food, booze and entertainment.

2. Give yourself some room to splurge.

Back in my irresponsible heyday, I would randomly find myself in a clothing store (or five) and before I knew it, I'd have several shopping bags on my arm and a few hundred dollars less in my bank account. Instead of turning a blind eye to the situation, which is what most irresponsible people would do, I'd feel extremely guilty, get three hours of sleep, and show up to work looking like a mauled cat (wearing a great new outfit, of course).

Still, no one wants to look like a mauled cat. To avoid the guilt -- and adopt responsible habits in the process -- factor your splurges into your budget so you can have fun without the remorse. When you budget for something (even a luxury), it means you can afford it, making it what I like to call a "responsible splurge."

For example, if you know your friends are planning a weekend vacation a few months away, set money aside each week specifically for the occasion. That way, when it comes time to pay for it, you won't be scrounging for pennies or maxing out your credit cards.

3. Make getting out of debt a priority.

If you've racked up credit card debt, don't freak out -- but stop now. (I repeat: Stop now.) Cut the credit cards in half, don't open any new ones, and pay the bills on time. If you can, pay more than the minimum amount due so that you pay less in interest over time. (The same goes for student loans.)

4. Pay yourself first.

Ah, the joys of saving. I just love putting money away for later instead of spending it on fun things, like dinner and drinks, or a weekend shopping spree -- don't you? Of course you don't, because saving isn't always fun, but it's necessary. Start by determining a set amount you can afford to stash away each month. Then, each time you get paid, take a portion of your paycheck and save it. Saving even just a small amount each month will add up over time, and before you know it, you'll have a solid savings fund.

5. Take advantage of your 401(k).

You've heard it before and you'll hear it again: The earlier you start saving for retirement, the better. Why? Because the longer you save, the more time your money has to compound and grow. Don't be afraid of the 401(k) -- embrace it. The golden rule is to contribute around 10 to 15 percent of your salary to your retirement account, and 20 percent if you want a more comfortable post-work lifestyle. However, you may not be making a ton of money now, and that's okay. The trick is to start small. Contributing even just a small percentage of your salary to your retirement fund will allow you to benefit from your employer's match. Your salary will increase over time, which means the amount you contribute will, too.

Sarah Kaufman is the editor-in-chief of The Manilla Folder at Manilla.com, the leading, free and secure service that helps you simplify and organize your daily life. Using just one password, Manilla lets you manage your finances, utilities, daily deals, travel and rewards programs, Netflix and magazine subscriptions, and more -- all through Manilla.com or the top-rated iOS and mobile apps. Sarah is also a regular contributor to Yahoo! Finance, Good Housekeeping, Woman's Day, The Motley Fool, and other major sites. For more budgeting tips and great ways to save, visit The Manilla Folder.

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