I’m a budget freak. These are my 7 must-know tips
Budgeting has been my problem for over a decade. As a personal finance writer and editor—and a naturally frugal person—I’ve spent hundreds of hours researching budgeting strategies, trying out budgeting apps, and honing my spending. I find the challenge exciting. Even I have felt frustrated by the sheer amount of budgeting advice available.
If you’re not into money management like I am, budgeting can seem like a daunting and downright painful process, but it doesn’t have to be. I’ve distilled over 10 years of experience into the best tips you need to know to get a better handle on your budget—and save yourself a lot of stress.
Read more: Hate your budget? Try this instead
My 7 must-know budgeting tips
Regardless of whether you are creating a budget whether you’re a first-timer or have struggled to stick to a budget in the past, these tips can help you manage your money like a pro.
✅Budgeting is about your CANs, not your CAN’Ts
Budgeting gets a bad rap. For the longest time, me I treated my budget like crazy it prevented me from doing something nice with my money. Budgeting should not be based on limits and restrictions. Done right, it can help allow yourself the things you love most.
I like to treat myself to a takeaway every week. I know it’s cheaper to cook at home, but it’s a luxury I look forward to. My budget helps me free up money for this habit by showing me where I can cut back on things I don’t care about, like clothes and streaming services.
📋There is no “right” strategy
Different experts promote different approaches to budgeting. Ultimately, the one that’s best for you is the one that makes the most sense for your situation—and the one you’re most likely to stick with.
Popular budgeting strategies to consider:
- 50/30/20 Method: With this approach, you allocate 50% of your income to necessities (such as housing and groceries), 30% to necessities (such as dining out and entertainment), and 20% to savings and/or paying down debt.
- Zero-Based Budgeting: This strategy forces you to assign every dollar you make to a specific category. If you have any left over, you can use it for whatever you want.
- Envelope Method: With this method, you set a spending limit for each category in your budget. Once you’ve reached your limit, you can’t spend more in that category.
Play around with several strategies to see which one works best for you. At first, I thought zero budgeting would help me be more disciplined, but I quickly realized that its painstaking, dollar-by-dollar approach made me never look at my budget again. So I settled on the envelope method, which helps me control my spending without overwhelming me.
🎯Be realistic
A budget should challenge you to be smarter with your spending, but it shouldn’t feel like torture. Being overly aggressive, especially in the beginning, only sets you up for failure. Be honest with yourself about how achievable the goals you set are.
For example, if you struggle to save, a big goal like saving $500 each month might be too much of a stretch. Instead, aim for a smaller goal like $50 or $100 per paycheck, and once you get into the habit, build it up from there.
You can always change your budget later to challenge yourself more. First, you need to establish a working baseline to be able to do not burn before you’ve even picked up speed.
📱There’s an app for that
I’m old enough to remember the days of balancing checkbooks and budgets with Excel spreadsheets. If the old-school approach works best for you, give it a shot. For most people, the fewer steps they have to take, the more likely they are to stick to their budget.
Budgeting applications do the tedious work for you. They can automatically track and sort your income and expenses, monitor your progress and identify ways to save. Many are free or inexpensive, and there are plenty of options to choose from. I use Rocket Money because I like its easy-to-use interface and $6 per month price.
Finally crush your budget goals with Rocket Money.
💰Don’t forget about savings
A budget isn’t just a way to keep your expenses on track. It’s also a way to make sure you’re setting aside enough money to meet your goals. Be sure to include a line in your budget for monthly installments to yours emergency fund and any specific savings goals, such as your vacation or retirement fund.
👩🏽💻Don’t just set it and forget it
Your life and financial situation change over time, and your budget should change with them. Reevaluate your spending categories from time to time to make sure they still meet your needs.
For example, if you’re constantly moving into a category that you’ve already reduced as much as you can, you can cut expenses in another category or find a way to earn more income. Your budget is never fixed.
💵Be easy on yourself
No one – or at least no one I’ve ever met – manages to stick to their budget 100% of the time. Life happens, and you’re only human. Instead of throwing in the towel when you have a less-than-stellar month, think of the next month as another opportunity to do better. Budgeting is a work in progress. Just making an effort is a step in the right direction.
More budgeting tips
English