At a time when many in America may be reassessing their financial behaviors and futures, The Balance asked several renowned personal finance experts and influencers to share their own narratives from the past year and how they’ve informed their perspectives in areas like budgeting, investing, and achieving financial independence. Today we hear from “The Budgetnista,” Tiffany Aliche. When the latest economic crisis hit, Tiffany Aliche already had firsthand experience dealing with a financial crisis, as she was among the millions directly impacted by the “Great Recession” of 2008. After losing her teaching job then and overspending in order to keep up with expenses, Aliche came to the realization that she needed to reprioritize her budgeting, preserve money, and come up with a plan to get out of her bind. This financial awakening helped lay the groundwork for “The Budgetnista,” a nom de guerre she created that has blossomed into a financial education empire that includes The Budgetnista blog, bestselling books, an online academy dubbed “Live Richer Academy,” and a core audience of hundreds of thousands of Millennial/Gen X women (whom she calls “Dream Catchers”) who have benefited from her advice. As she celebrates the release of her latest book, Get Good With Money, the Newark, New Jersey-based Aliche spoke with The Balance about what budgeting means now, how budgeting is affected by side hustles, and how Millennials can readjust their short-term financial goals. Her answers have been edited for length and clarity.

What does budgeting mean now? Is it possible to have a life when there are economic uncertainties and hardships?

It depends on where you are. If you are really struggling, then I would not be thinking, “Well, how can I save for vacation?” You really ought to be thinking, “How am I going to purchase groceries?” And it’s OK. Those things are temporary. So, to me, there are three, or maybe four, levels to budgeting. 

The Health and Safety Budget

There’s a health and safety budget. This is when you’re struggling, and actually don’t have enough to pay all your bills. I say, “Well, then don’t. Pay the bills that maintain your health and safety.” I wish someone told me this during the last recession, because I squandered all of my money trying to pay every single bill. And then, I didn’t have enough for food, and where was I going to live?  In the beginning, it’s like, “Look, I don’t have [the money], Verizon, but when I do, I will pay the bill. Do you have a hardship program?” And if not, even if they’re like, “Well, we don’t care that you don’t have what we wanted,” they’re not going to send you to jail. Sometimes, it’s OK not to pay Verizon if you have to pay for food, shelter, and essential things. That’s the health and safety budget.

The Noodle Budget

Next budget above that is what I like to call your noodle budget, like if you had to eat mainly ramen noodles. It’s like that college barebones budget, like, “We don’t have any money for anything extra.” So, maybe you’ve been furloughed and are on unemployment. It’s just enough to pay your bills, but there’s nothing extra left. And that’s OK. You can live at that noodle budget temporarily.

The Regular Budget and the Abundance Budget

And then, there’s your regular budget. This is when life is decent. You have enough to set aside for fun things, but also pay bills. And this is where most people tend to live. And then, sometimes, you really have your abundance budget. That’s when, for whatever reason, you’ve come into a windfall. Maybe you’ve just gotten a raise. Or maybe you started a side hustle, and you’re making additional money. And so now you could really lean into thinking about not just investing for retirement, but maybe investing for wealth, as well as having fun.

Budget for Where You Are

So, I think budgeting looks different depending on what stage you’re in. Tiffany in 2009 was in health and safety, and it would be about three years before I could even get to the noodle budget. After three years, I was like, “OK, I’m making just enough to just pay my bills.” And then I started to do a little bit better, that I could just go to a normal budget, where I was like, “OK, there’s enough for a little bit of fun, and the rest of my life.” And now, I’m in my abundance budget. From this place, there’s more philanthropy. There are bigger purchases that I can make, but also, too, one of the things I wish I would’ve known is that before you get to your abundance budget, do your homework about what investing looks like at that level. Because with your abundance budget, you have this excess you’re enjoying, like vacation. But it’s still excess. I can maximize that money, and essentially make my money make money. So, every level really requires a different skill set.

You mentioned side hustles, which have become more prevalent and crucial during the last year. But how do you budget on irregular income? 

Well, first, you have to figure out, what is your baseline? This is important for your noodle budget as well, meaning, without the bells and whistles, how much does it cost me just to maintain my life without extra stuff? Let’s just say, your regular life costs you $6,000 a month. But if you were to cut out all the excess, it’s really more like $4,000. So then, now you know, if you’re doing gig work, you need to make $4,000 a month. Again, you want to know your baseline. And then from there, you still need to work by numbers. So what I was doing when my life was more up and down financially is that I would pay my personal pot, and the pot would pay me.

Pay Your Personal Pot So It Can Pay You

I would make money from a gig, the gig would pay the pot, and then the pot would pay me $2,000 every other week, because I knew I needed $4,000 a month. There’ll be some months where I would make $10,000, and others where I would make $500. And so that’s how I regulated—the pot was like the regulator. I remember the first time I made a particular mistake. I made $10,000 in one month, and I was like, “Oh my God, this is a new life.” I spent it all. And the next month I made $500, and I was like, “Oh my God. I don’t have any more money.” I just assumed I was going to keep making $10,000 a month. Then I realized that that $10,000 had to also go for the current month. So, I obviously ended up being late [on payments]. But then I understood.

Figure Out Your Baseline

If you are someone whose money fluctuates, figure out your baseline, and at the very least, try to plan to pay yourself that baseline from the pot, and let the money you make pay the pot. And as things get better, as more money is pouring into the pot, you can live beyond just the baseline and your new budget. So instead of getting paid $2,000 every two weeks, you’re getting paid $2,500 because there’s space for that.

In times like these, how should Millennials readjust their financial goals, whether short- or long-term? 

What’s key now is keep the big goal in mind. Once I lost everything due to the last recession, I ended up moving in with my sister, sleeping on her couch. I was like 30, or 31. And I remember I’d created a list of all the things I wanted to do. Then, I quantified how much it would cost me a year if I wanted to live this type of life. And it was like I’d have to make $300,000 a year. That’s like saying I have to make “Corn Flakes” a year. What does that even mean? $300,000? Where am I going to get that from? But I still put that big goal in mind. It’s almost like you pin it on the board. It’s there, but then you focus on the day to day. So I was just like, “So what am I going to eat tonight? $300,000 is my big pie in the sky goal, but can I get to 500 bucks a month?” So, I worked really hard to figure out how to make that $500 a month. Because of my sister, I didn’t have to pay rent. And then she really helped out with our food. Five-hundred bucks was just to cover some basic bills. And then once I figured out how to do that, how do I multiply that to $10,000? Do I have to do more speaking engagements?

Let Your Big Financial Goal Motivate You

It’s OK to be hyperfocused on the now when things are really tough, while knowing in the back of your head that the big goal is there. Once you breathe and get past the “I don’t know if I’m going to make enough to support basic life” mindset, then you can start saying, “OK, let me relook at that big goal and chop that down, and what does that look like? OK, well, I’m not going to make $300,000 this year, but can I make $50,000?” Now that I’m not so desperate to make sure that I have food, a place to live, what does $50,000 a year look like? Then what does $100,000? Once you move past danger mode, you can start to slowly incorporate your big goal into what you have to do, year by year, and how you have to grow in order to achieve your big goal. That’s how I navigated and, honestly, I stayed in hyperfocus for probably three or four years. It wasn’t six months, but years of asking myself, “What I need to make in order to have dinner tonight?” I want to give that injection of reality, because people may think it’ll only take six months, or a year. It might not. It might be longer than that.