BY TARUN VENKATESAN ON 23RD DEC 2025
Budgeting is often framed as a restriction on spending. In reality, it’s a way to build a financial baseline that helps you make better decisions by planning ahead.
I started my full-time job a couple months ago – here’s how I’ve been budgeting, saving, and investing for the last 2 months.
1. Establishing a Financial Baseline
Before investing, optimising, or stressing about returns, I feel everyone should have a baseline understanding of where your income is going once it hits your checking account. A simple rule of thumb that works well early on, that you might’ve seen online too, is:
50% Needs / 30% Wants / 20% Savings
This isn’t about being exact to the dollar. It’s more about knowing whether your lifestyle is structurally sustainable and how much you’d have at the end of the day for you to invest and grow.
I budget based on income from my job and track expenses using a personal tracker that I update whenever I’m free, usually once a week. It’s built for everyday entries, here’s what that tracker looks like.
If you prefer something prebuilt, Excel also has solid budgeting templates. I personally like mine because it allows me to add daily entries as opposed to only one glance, but it comes down to personal preference.
Ultimately, the tool matters less than the habit.
2. Building an Emergency Fund
The future is unknown. Tomorrow you might not have the same faculties you do today, and that’s just a fact. So just like everything else, emergencies require money.
The general guidance that you’d see online is 6–12 months of living expenses, but the right number depends on your situation – job stability, dependents, health, and risk tolerance all matter.
This money isn’t meant for investing into crypto or buying that risky stock that’s going to IPO soon. It’s there so that unexpected events can be handled. Job loss, medical bills, etc. Keep these funds handy for a rainy day.
3. Paying Off High-Interest Debt
High-interest debt quietly works against everything else you’re trying to do, especially with credit cards making bulk of their money from interest and transaction fees.
I’m privileged enough not to have any student loans or high-interest debt, so I don’t have to worry about this, but if you’re earning market returns of 10-12% and paying 18–25% on credit cards, the math is already working against you.
Paying off high-interest debt reduces risk, increases your credit rating which makes you more likely to buy and own your own home, and will free you up in the long-run to invest and save.
4. Maximizing Your 401(k)
Once the foundation is set, tax-advantaged investing comes next.
A 401(k) allows you to contribute pre-tax income and grow it tax-deferred, meaning you only pay taxes when you withdraw the money in retirement. Many employers offer a match – in my case, 3%.
If you can, max it out. If not, at least contribute enough to capture the full match – it’s free money.
5. Funding a Roth IRA
A Roth IRA complements a 401(k) by offering tax-free growth.
You contribute post-tax dollars, but qualified withdrawals are tax-free. Early in your career, when your tax rate is likely lower, this can be especially powerful. It also adds flexibility and diversifies future tax exposure.
6. Investing
Once retirement accounts are funded and ready to gain interest, the next step is to find and set up a taxable brokerage – Chase and Fidelity are the most popular and easiest to use.
I currently invest $400 per month into SWSTX (Schwab Total Stock Market Index Fund). I chose a total market index fund for broad diversification, low fees, and simplicity – I don’t need exciting because I’m fine with boring and reliable.
For context, some facts about SWSTX:
- YTD: ~18%
- 5-year average: ~13.8%
Assuming a conservative 11% rate of return, $400 invested monthly becomes approximately:
- ~$86k in 10 years
- ~$343k in 20 years
- ~$1.1M in 30 years
- ~$3.35M in 40 years
Of course, the returns won’t always be smooth. There might be volatile growth and lower-than-average returns some years, but overall index funds represent the entire stock market and should return 10% or more.
7. Understanding Opportunity Cost
Every dollar has a choice – this is something that budgeting has made me realise. To be fair, I already knew this from my Econ classes in college but never truly internalized it until I started earning and living independently.
Budgeting has made me truly internalize opportunity cost.
Every dollar has a choice. Money spent today is money that doesn’t compound tomorrow. That doesn’t mean you shouldn’t spend – experiences, health, relationships, and quality of life matter – but maybe that spending should be more intentional for all of us.
Tracking expenses removes guesswork. You stop wondering where your money went and can start deciding where it should go.
Final Thoughts
Budgeting hasn’t made me wealthy or a mega-billionaire.
What it has done is create structure – a system where I’m more aware of my spending, less reactive with my money, and a little more confident in my decisions. It’s simple, repeatable, and adaptable as my income and life change.
The biggest benefit isn’t the numbers on a spreadsheet. It’s reduced stress, fewer regrets, and a clearer sense of control.
And for something that requires very little complexity, that’s a meaningful return (pun intended).
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