Struggling with your money doesn’t have to be something that you fight with your entire life. In fact, most cases can be fixed in just a couple of months. These 11 budget tips are perfect for anyone and everyone who needs to get their finances back on track.
Once upon a time, I really struggled with sticking to a budget. It seemed that no matter what I did, I just couldn’t get on my feet financially. I wish I could say that was years ago, but the truth is, it’s not. My husband’s death really threw me for a loop and took my financial goals with it. Grief will make you do absolutely insane things and going off your monthly budget is one of them
So, if you’ve ever felt like your money disappears the minute you get it, you’re not alone. I’ve been there. But with the right approach and a few smart budget tips, you can take back that control and start building the life you really want. After years of trial and error, these are the only budget tips I truly believe anyone needs.
What is the 50/30/20 Budget Rule?
The 50/30/20 budget rule is a great way to split your money up once you get on your feet a bit better. It says you spend 50% on necessities, 30% on wants and 20% for savings. Those wants can be anything from entertainment to holiday gifts. Rent, car insurance and other necessities, you cover with half of your income.
What are the 4 Types of Budgeting?
Believe it or not, there are more than 4 types of budgeting, but most people use one of the four main ones. These are incremental budgeting, activity based budgeting, line item budgeting and zero based budgeting. For the purposes of this post, we will just assume you’re using a zero based budget since that is what I personally use. This is a budget where you give every dollar a purpose in your budget. Whether that purpose is meeting your short-term goals or just being set aside in the bank.
So, if you’re ready to dive in, let’s get these budget tips rolling.
1. Know Your Exact Numbers
This sounds basic, but most people have no idea what’s their actual wages are each month and what expenses are headed out each month. Instead, they just wing it as the month goes along robbing Peter to pay Paul until the end of the month when the cycle starts again.
Budget planning starts with knowing your real numbers, not estimates. Write down exactly how much money you have coming in. Whether that is a weekly paycheck or a monthly payment, you need to know what your monthly income is to start.
Next, write down every bill, and average spending for things like groceries, gas, and other variable expenses. Until you see the full picture, you can’t create a realistic plan.
2. Track Every Single Dollar
If you don’t know where your money is going, you can’t fix the problem. Tracking doesn’t have to be complicated. A regular notebook, an account ledger like I use, a free budget app, a printable expense tracker or even a budget spreadsheet will do the job. The first month might be eye-opening and maybe a little uncomfortable, but this step alone can change your lifestyle and spending. Eventually, you’ll notice what your spending trends are and be able to fix any leaks that are causing you to go broke.
If you can’t remember every expense, that’s okay. Use your bank statements to double check your transactions to make sure you account for all of your essentials and those impulse buys every month. For groceries and shopping in store, keep all reciepts so you can track them.
3. Build a Bare Bones Budget First
Before you start planning for fun things or extras, create a bare bones version of your budget. This is the budget that only covers necessities like housing, utilities, basic groceries, gas, and insurance. Knowing your bare minimum gives you security. It shows exactly what you need to survive and what you can cut if life throws you a curveball.
This means that you need to account for all of your basic budget categories. These are basically any necessary monthly expenses you have. Things like rent, utility bills, groceries, gas and more. If you don’t account for all of them, you could find yourself with budget breakdowns mid month.
4. Give Every Dollar a Job
Like I said earlier, one of the most effective budget tips I’ve ever used is zero-based budgeting. That just means every dollar of income gets assigned somewhere, even if it’s going into savings. When your money has a job, it can’t slip away unnoticed. Unassigned dollars are what lead to overspending.
5. Cut the Obvious Waste
You can’t out-budget bad habits. If you’re paying for subscriptions you don’t use or eating out multiple times a week, it’s time to take a hard look. Cutting waste doesn’t mean you never treat yourself, but it does mean trimming the stuff that doesn’t actually make your life better. Cancel what you don’t need, and redirect that money toward something that does.
6. Teach Yourself to Wait
Impulse purchases are a budget killer, but impulse buys do have their place. One of my favorite budget tips to manage them is the 24-hour rule: wait at least 24 hours before buying anything that isn’t essential. Most of the time, that “must-have” item doesn’t feel so important the next day. This single habit can save hundreds over time.
7. Automate the Important Stuff
More often than not, life gets really busy sometimes. This can backfire in more ways than one for your budget or debt payments. Forgetting a bill or skipping savings can throw your whole plan off. It can also add late fees that no one wants to pay. Automate as much as you can like bills, credit card debt and other debt repayment, mortgage payments and transfers to savings accounts. Automation keeps your priorities on track without relying on willpower.
Just be sure to keep the money in your accounts to cover your automated payments. Otherwise you could end up in bigger trouble than you started.
8. Start a Small Emergency Fund
Once your bills are paid each month, you’ll need to start saving for emergencies. You can do this with either a dedicated emergency fund or by using sinking funds. Your emergency fund is a savings account that is set aside specifically for emergencies. Sinking funds are basically an emergency fund but the money is divided by known expenses.
For instance, let’s say you know that in 6 months your car insurance is going to bill at $600. You would prepare sinking funds for this at $150/mo. This way, by the time your insurance is due, you have all of the necessary money without putting a strain on other expenses.
9. Stop Comparing Your Life to Others
This may not sound like a budget tip, but it absolutely is. Some of the best advice I have ever been given is not to compare your beginning to someone else’s middle. If you are restarting, of course there are going to be people that are farther ahead of you. By comparing, you are giving yourself the okay to compete with the Joneses so to speak.
Keeping up with the Joneses is a great way to break yourself financially.
10. Make Budgeting a Weekly Habit
As much as we wish it was, budgeting isn’t a set it and forget it type of thing. You will need to check, recheck and update it as the month goes on. This is especially true if you are running a shortfall or deficit. For me, I do a monthly budget as well as a weekly spending plan. Having both allows me to see at a glance what has been paid, what still needs paid and where I should end up at the end of the month.
11. Celebrate Your Wins
While it can certainly feel like it, budgeting isn’t a punishment. If anything, it is a stepping stone. We all have dreams and dreams take a financial security. Your budget is the way to get to that financial security.
If you look at budgeting as if it is a punishment, you will burn yourself out very quickly. A change in mindset can go a long way for your finances.
These 11 budget tips may seem as if they are too simple. Or maybe they seem too hard right now. The key to a successful budget honestly relies on one thing; getting started. If you never get started, you can never win.