Just thinking about creating a budget can feel overwhelming, but streamlining your finances will make it easier for you to reach your goals. You may not believe it, but budgeting can actually be fun if you do it the right way! The outcomes of a successful budget include paying off debts, gaining some extra money, feeling a sense of control over your life, and increasing your overall well-being.
Creating and sticking to a budget is an attainable goal that anyone can accomplish. Follow these tips and you're sure to be on the right track!
Steps to creating a budget that's right for you
1. Figure out your why.
Why are you budgeting? If you don't have a specific reason then it will be difficult to stick to your budget. Maybe you're saving up to buy a house, get out of debt, or you want a shiny new car. Determining your motive will help keep you on track toward your goals.
2. Brainstorm all expenses.
Look at your finances and determine how much money you spend every month. Check your bank account for the past few months, and write down your recurring expenses like rent and utilities, as well as ones that seem to come up often like eating out or going to a movie. Compile all of your expenses and you'll set yourself up for a successful budget plan.
3. Create priorities.
Start with the most important expenses. Are big grocery trips on the top of your list of priorities, or is going out with friends more important in your life? Everyone has different priorities when it comes to spending money. Go through your expenses list and decide how to weigh them so your budget works best for you.
4. Set some numbers.
First, go through your necessary categories like housing and food. Then, decide what you are willing to spend in other areas of your expenses list. Maybe you want to set aside $50 for a night out each month, or you decide that $150 will cover your grocery bill. Consider your overall spending limit when you are doing this and balance out as needed.
5. Automate away.
Technology is your friend! Set up automatic payments for your utilities, housing, car payments, insurance, and any other expenses you have every month. You may discover subscriptions you don't need or bills that don't feel justifiable to you. This will also ensure you don't miss payments on important accounts.
6. Leave some wiggle room.
Make sure you're setting aside an adequate amount each month in case something comes up. Think about if your car breaks down, if your pet needs emergency veterinary care, or if you rip a hole in your favorite pair of jeans. Have a fund set aside in case you need to tap into it for the unexpected happenings of life.
7. One last run-through.
Does your expense list surpass your spending limit? Time to go back through your list and reconfigure how much money you set aside for your expenses, or look at which expenses you’re willing to cut based on your priorities.
Things to do after creating the budget
1. Stay accountable.
This can be easier with a partner. If you're married, set limits with each other and check in during the month to make sure you are both staying on the right track. If you're single, you could try budgeting with a friend and holding each other accountable with text check-ins throughout the month. Then, set up a time to meet with each other every month to reassess your individual budgets as needed.
2. Give yourself some grace.
While staying accountable is important, it's also important to remember that it takes time to establish a habit like sticking to a budget. The first few months are not going to be perfect. Just try your best, and don't be too hard on yourself if you don't quite meet your financial goals. There's always next month to try again!
3. Check in during the month.
Keep an eye on your bank account and expenses throughout the month, not just at the beginning and end. Especially when you're utilizing automated expenses, it can be easy to forget to look at your accounts and let yourself slip away from the budgeting mindset. If you have trouble remembering to check in, you can set a weekly or daily reminder on your phone to check your bank account app so that you know where you're at in relation to your monthly goals.
4. Keep it flexible.
Reanalyze your goals every once in a while, and don't be afraid to adjust your budget if necessary. Life changes, and so will your budget needs. Also make time to sit down and evaluate the tools you're using. Maybe you're doing everything on paper, and you'd like an electronic alternative. Maybe you scheduled four hours for creating a budget every month, but you only need one. Your budgeting habits should evolve to be the best for you.
5. Track your progress.
After a few months of budgeting, check in. What's working for you? Talk about how following a budget is helping you. Focus on the positive!
6. Bring in a pro.
Getting professional help with your budget gives you new tools to successfully execute your financial plans. The Village Financial Resource Center offers budget counseling, as well as a debt management plan, pre-marital financial counseling, and more! You can even get financial counseling online if that works better for you. Professional financial counselors can offer expertise and resources you may not know about on your own.
Tools to help with budgeting
- The National Foundation for Credit Counseling (NFCC) offers tools to help you determine what your monthly expenses should be, find out about your financial well-being, and calculate your budget every month.
- Consumer.gov provides a free budget worksheet that you can fill out to build your budget.
If you need help honing your budget skills, the financial counselors at The Village Financial Resource Center can help. Call 800-450-4019 or contact us online to set up an appointment online, over the phone or in person.