I think the number one issue I hear about from clients and readers is not knowing how to budget. Or feeling overwhelmed by what budgeting is supposed to look like. Traditionally, budgeting looks like having an exact amount to spend on all the different categories of life, and never going over in any of them. But in reality, every month looks different than the one before, so you don’t always know how much you’ll spend on specific things. For example, last month, I spent way more than usual on going out to eat. But I spent a lot less on things like entertainment. So my actual budget was even and I didn’t overspend. However, if I looked at it in the way Mint told me to, I might be stressed out about overspending on dining.

But in reality, every month looks different than the one before, so you don’t always know how much you’ll spend on specific things.

Luckily, you don’t have to be stressed out about that if you use the one number method. I switched to one budget number a few years ago when I realized it was getting really onerous to stick to a specific budget number in all the different possible categories. If I wasn’t spending more than was available to me, why did it matter where it was going? Of course, if you feel like you’re spending money without having an idea of where it’s actually going, it’s helpful to categorize it so that you can be more mindful about your spending. However, if you want to simplify your budget, while making sure you don’t overspend each month, paying attention to just one big number can make your life a lot easier.

Add Up Your Monthly Income

It’s important to have a solid understanding of how much you’re bringing in every month. Add up your paychecks to get this amount. This is the amount that comes in after taxes and after any other pre-tax deductions, like health insurance or your 401k contributions.

If your income is not consistent, perhaps if you’re self-employed or you work for tips, this exercise can be more difficult. My advice is to lean on the amount that you absolutely know will come in every month. Either that, or the amount you must earn in order to pay your bills. Anything that you earn that is more than that amount should be applied towards your debt or savings goals.

Right now, Dan and I are relying predominantly on his income from his full-time job. Since my business income is still shaky now that I’m full-time, I’m only planning on having $1,000 as take home pay. The rest of my earnings goes to business expenses and taxes. If there’s more leftover from a good month, I consider that extra and apply it to our savings goals or put it back into my business.

Calculate Your Fixed Expenses

Fixed expenses are any costs that usually stay the same each month. This can be rent, insurance, utilities, or subscriptions. These are the types of expenses that you usually cannot change (even if you want to). So get clear on how much absolutely has to go out every month.

It’s also a good practice to calculate non-monthly expenses when you do this exercise. If there are quarterly or annual fees, like car insurance, it’s helpful to set money aside each month so you’ll have that money when the full amount is due. Calculate how much you would have to save each month to add up to the actual payment. Then set up a direct deposit into a savings account or separate checking account that can be billed for those fees.

Get Clear On Debt Payments

It’s important to know exactly how much you owe towards debts each month. This should include any debts that you are working to pay down. Some examples are: credit cards, student loans, car payments, home equity loans, medical bills, etc. Make a list of how much you must pay towards your debt. These amounts can change as time goes on, especially if you’re trying to be more aggressive with your debt repayment.

Identify Your Savings Goals

If you have enough money to both pay down debt and save at the same time, specify how much you want to save each month. You should prioritize emergency savings first. From there, you can decide what else you want to save for. Some of the most popular savings goals of my clients are for travel, hobbies, and a downpayment for a home. What do you want to save up for? How much do you need to save to reach your goal? Once you’ve answered those questions, figure out how much you would have to save each month to get there.

Spend What’s Left

Take your monthly income and subtract your fixed expenses, debt payments, and savings amounts. The remainder of money that is left is the amount that you have available to spend on whatever you want each month. If you don’t think it’s enough to cover you for groceries, transportation, entertainment, and other things, you may have to lower your fixed expenses or cut back on your savings. But if you are comfortable with what’s leftover, you just have to keep that number in mind while you’re spending throughout the month. As long as you don’t spend more than that amount, you will be on budget. This makes it so you don’t have to worry about your spending in different specific categories.

Do you think having one budget number to keep in mind will make it easier for you to track your spending? I know it made my life feel a lot easier. Share what you think in the comments!