VALERY VARGAS: Getting Your 2021 Budget Ready

CEO/Founder of Dainty Dollar, LLC

When I first started budgeting, I felt overwhelmed. There was so much information to process all at once and what seemed like an endless number of ways to start. Naturally, I am the type of person who will research and then need to translate the information into my own language so-to-speak - Budgeting was no exception to this. I set out and created my very own Monthly Budget Template which gave me the ability to access my finances and plan for my future in a familiar and extremely manageable way! 

2020 has affected each of us, in one way or another. It’s been the year of financial flexibility for some but if you’re like me, a constant revisit to my budget was, and still is, a necessity. So, with the Holidays soon to arrive and a new year on the horizon, let’s take a look at how we can end the year right.

I have divided my Monthly Budget into six separate categories. I find this categorization is vital to staying organized and calm during the budgeting process-  Let’s be real, at times, getting honest with yourself about your finances has potential to be a bit overwhelming. Separation is key. 

The six categories are: Income, Fixed Expenses, Variable Expenses, Sinking Funds, Savings, and Debt. 


Start out by listing your projected income for the month. For example, if you receive bi-weekly payments, you will have two payments listed (remember this Budget works month to month). Make sure to include any additional paychecks for those months that have an extra payday – We love those!


A fixed expense is something that you must pay. Whether that be your rent, mortgage, cell phone bill, utility bills, car payment, prescriptions, etc. bet sure to jot down anything that you would consider a bare necessity. Do not include food in your Fixed Expenses- We will add it to our next category.   


We’ll call this one your “non-essentials.” I know what you’re thinking, “she just said food was a non-essential!” Think of it this way, your food expenses have the greatest potential for change and that is why they belong here. The Variable Expense category is where we tend to overspend. Once you start listing these expenses you will see how quickly the little luxuries start to accumulate.  Consider adding your streaming subscriptions, eating out, gas, grooming, gym memberships, and general entertainment to this category. 

*Bear in mind that during some months these sub categories may have a projected $0 expense. Keeping these Variable Expenses listed however is a reminder that at any time we can make the proper adjustments to budget for them – It’s all about priorities *


One of the major reasons why “emergencies” feel like financial catastrophes is largely due to lack of planning. Sinking Funds are one of the most important facets of budgeting. These are funds set aside for a planned expense. You deserve to give yourself peace of mind by planning ahead and being realistic with what’s coming short and long term. Holiday expenses are a perfect example of the necessity for a Sinking Fund. The Holidays occur every year without fail, so by saving in small increments throughout the year we will be able to be absolutely prepared to spend when the time comes. I now start my sinking fund for Christmas in January, saving a tiny bit every month. By the end of November (around Black Friday) I has the cash ready to spend completely guilt-free! Of course, this can be translated into other expenses like home renovation, vacation, medical expenses, etc. 


Paying yourself first is something I would highly recommend. However, savings and debt can be managed differently according to your specific goals. If you don’t have any debts, excluding a mortgage, I would highly recommend automating your savings. 

Personally, I like to “set it and forget it” when it comes to my savings. I have automated my savings by dividing my paycheck into three different direct deposits. If you need help, contact your employer’s payroll department for assistance with setting this up. The first deposit goes into my savings account, then my IRA, and lastly my checking account, where I will pay all of my fixed and variable expenses. By divvying up your paycheck you will start to train yourself to think of your paycheck as just the amount you are receiving into your checking account. I used to throw everything into my checking first, because I wanted to control when and how much was going into my savings. It always turned out to be very rarely that I would transfer and when I did it was never enough!


If you have any kind of debt, not including a mortgage, you should first focus on building a starter emergency fund of $1000-$3000. This will give you a cushion that will help prevent any emergencies from forcing you further into debt. A fully funded emergency fund occurs once you set your emergency fund goal and finally reach it. 

After you’ve figured out how much is left over once you’ve compiled your expenses in categories 1-4 AND have fully funded your emergency fund, it’s time to focus on killing that debt! Go nuts and throw all of your extra money into it and do it often. There are two proven methods of paying down debts, the Avalanche and Snowball methods. In all honesty, choosing to pay off debt in general is far more important than getting stuck on the details of each method. Of course, if you are interested, take a look. They may suit you. My advice however is to just start.  

There is no better time to set yourself up for a financially free new year than this very moment! The debt free journey can certainly be a long and challenging one but with the necessary tools set in place (pen and paper, excel, or a monthly budgeting template) anyone, including you, can reach your money goals. All it takes is a little bit of grace, some patience, and a lot of determination. As the whirlwind, we’ve called 2020 comes to a close, set yourself up for a financially stable 2021. No one deserves it more than you!

Ready to take up a notch? You can get a copy of this google sheet budget template by clicking here.

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