It’s the dreaded B-word—budgeting.
Unfortunately, the wordbudgethas gotten a bad rap.But when it all boils down, a budget is just a plan for your money.
And no matter what you’ve heard or thought about budgeting in the past, hear this:A budget doesn’t limit your freedom—itgivesyou freedom!It’s literally you taking control, getting intentional, and telling your money what to do. Every single dollar you make!
Also, no matter why you’re here, whether you’re just getting started in the budgeting world or you want to up your game, these 15 budgeting tips will help.
15 Budgeting Tips
1. Budget to zero before the month begins.
This means before the month even starts, you’re making a plan and giving every dollar a name. This is what we callazero-based budget. Now that doesn’t mean you have zero dollars in your bank account. (Leave a buffer of a few hundred dollars.) It just means your income minus all your expenses equals zero.
This is how you make sure none of your money slips through the cracks or gets spent by accident. This is how you take full control of every dollar you make.
2. Do the budget together.
You need a financial accountability partner! If you’re single, find someone who will cheer you on—and help you stick to your goals! Have a monthly budget meeting to review what happened last month and what’s coming up.
If you’re married, sit down once a month and have afamily budgeting night. Make it fun!Grab some of your favorite snacks and put on a good playlist.
You need to get on the same page with money, so set goals together and dream about what the future will look like. Remember: If the two of you are one, your bank accounts should be one too! It’s no longeryourmoney ormymoney—it’sourmoney.
3. Remember that every month is different.
Some months you’ll have to budget for things like back-to-school supplies or routine car maintenance. Other months you’ll be saving for things like vacations, birthdays and holidays.
Make sure you prepare for all of your expenses—even those month-specific ones. Keep those special occasions from sneaking up on you by pulling up your calendarwhileyou’re creating your budget.
4. Start with the most important categories first.
Giving and saving are at the top of the list, and then comes the Four Walls: food, utilities, shelter and transportation. Once yourtruenecessities are taken care of, you can fill in the rest of the categories in your budget.
5. Pay off your debt.
If you have debt, paying it off needs to be a top priority in your budget.
Usethedebt snowball methodand the7 Baby Stepsto get rid of debt as fast as you can. Attack it! Get mad at it! Stop letting debt rob you of the very thing that helps you win with money—your income.
When you stop paying for the past, you can start truly budgeting for the present—and the future!
6. Don’t be afraid to trim the budget.
Brace yourself! It might be time for some budget cuts in your life. If things are tight right now because of inflation or whatever reason, you can save money quickly by trimming your budget. Go from three streaming services to one, dine out less, and shop at discount clothing andgrocery stores.
Remember, your budget cuts don’t have to last forever. You can always make adjustments later on.
7. Set auto drafts.
Paying bills isn’t the most exciting part of adult life. But it’s also unavoidable. Save time and stress by setting up auto drafts for a few of your bills.Start budgeting with EveryDollar today!
Just make sure you’re paying attention to your cash flow. If you set up too many auto drafts and stock up on bulk groceries at the same time, you might end up overdrafting your account. Know when the money’s coming in and out of your bank account!
8. Have goals.
Whether you’re paying off student loans,building up your emergency fund, or paying off your mortgage, you need to focus on yourwhy. What’s the reason you’re making these sacrifices?
Use your why to set goals that get you closer to the life you’re dreaming of. Then, write down your goals. Make them visible. And give them a timeline so you’re always making progress!
Remembering your why and keeping your goals in front of you will help you stay motivated even when you don’t feel like budgeting.
9. Track your progress.
Speaking of goals, don’t set them up and forget about them. Keep tracking your progress.
Those monthly budget meetings are a perfect time to talk about yourgoals. Celebrate how far you’ve come and spend time looking at what’s left to knock out.
And get real with yourself. Is your current budget helping you move forward? If your spending habits don’t line up with your goals, think about how you can cut expenses or increase your income so you can reach your dreams faster.
10. Keep a miscellaneous line in your budget.
Here’s a budgeting tip you can start this minute: Put a small amount of money aside for unexpected expenses throughout the month. Label this as your miscellaneous line in your budget. That way when something comes up, you can cover it without taking away money you’ve already put somewhere else.
And listen, if certain expenses keep popping up in this category, it’s probably time to give them their own budget line.
11. Cut up your credit cards.
Not only do you need to pay off debt, but you also need to ditch those credit cards for good. Stop using them! Cut them up, shred them, or even make a craft project out of them! Whatever you do, get the temptation of more debt out of your life.
I’m serious! I know people say they pay off the balance at the end of the month, but even if that’s you, making one lump payment a month is a horrible money management system. You don’t know where your money’s truly going, so you can never truly take control of it.
And if you are racking up interest (which is sky-high these days), your income is literally stuck in the past. That’s no way to get ahead. I want you to get ahead with your money, and I know you do too (that’s why you’re looking for budgeting tips).
So, stick to using your debit card (and even cash!) and dump those credit cards like your ninth-grade fling.
12. Use cashfor certain budget categories that trip you up.
If you’re constantly overspending on your grocery budget or fun money, cash out those categories and use theenvelope systemto hold you accountable. Just go to the bank and pull out the cash amount you’ve budgeted for that category. Once the cash runs out, stop spending! It’s the ultimate accountability partner.
13. Try an online budget tool.
If pen and paper (or spreadsheets) aren’t your thing, it’s time to join the 21st century and use a budgeting tool likeEveryDollar. You can focus on planning a budget and tracking your spending from the comfort of your smartphone! Plus, you can sync up your budget with your spouse, which is great for keeping that communication open.
14. Be content and quit the comparisons.
You have much more than you realize. Don’t compare your situation to anyone else’s. Comparison will not only rob you of your joy but also your paycheck. Keep moving forward and doing what’s right foryourpaycheck, your goals and your life!
15. Give yourself lots of grace.
One of the key things to remember about budgeting is this: It usually takes three to four months to get a handle on it. Your budget won’t be perfect the first time or the second. But you’ll get there! So give yourself some grace as you go. Learn from your mistakes—and keep pushing forward!
How to Make a Budget
What good is a list of budgeting tips without a breakdown of how to make a budget? Here are your five steps to do just that!
Budget Step 1: List your income.
Start by listing the money you plan on getting during that month: normal paychecks (for you and your spouse) and anything extra from a garage sale, freelance job orside hustle.
Budget Step 2: List your expenses.
Next, list out your expenses, starting with giving, saving (depending on your Baby Step), and the Four Walls I talked about in Tip 4. (That’s food, utilities, shelter and transportation.)
Then list out all the other monthly expenses, starting with essentials and ending with fun stuff. We’re talking debt, insurance, savings, entertainment and any personal spending.
Budget Step 3: Subtract your expenses from your income.
Remember that zero-based budget I mentioned earlier? When you subtract your expenses from your income, it should equal zero!
But what happens if you do that math and have extra left over? Don’t just leave it, or you’ll impulse spend it here and there without even thinking. Give it a job by putting it toward the Baby Step you’re on!
What if you get a negative number? Hey—it’ll be okay. But you will need to cut back on the extras or pick up extra work to cover it.
And don’t skip this key budgeting tip: Put any extra money you make to work. Get it in the budget!
P.S. RememberEveryDollar? Well, it does all this math for you. Yep. You’re welcome!
Budget Step 4: Track your transactions.
Can I let you in on a little secret? The way you’ll really win with budgeting is to track your transactions. That means you put every expense and every bit of income into your budget all month long.
This helps you stay accountable to yourself, your spouse (if you’re married), and your money! You aren’t hiding spending from anyone. And you won’t overspend because you’ll know what’s left in every budget line.
Budget Step 5: Make a new budget before the month begins.
I know I already mentioned this, but I’m repeating it here because it’s the final step in your budgeting process. And honestly, it’s worth repeating because it’s so important.
When you budget before the month begins, you’re getting yourself ready for everything coming your way. So don’t skip this step: Make a new budget—every single month.
Budgeting Tip for Inconsistent or Irregular Income
If you’ve got an inconsistent or irregular income, you can still budget! As you list out your income, go with what a low-earning month would look like for you.
Then, as you’re listing expenses, prioritize needs before wants. If your income ends up being more than you planned, you can add money toward your current Baby Step or one of those extras you skipped when you first set the budget.
How Can Budgeting Help Me?
There are so many ways a budget can help you. So many. But here are a few of my favorites.
- A budget shows you—with 100% clarity—exactly where your money’s going so there’s no more wondering where you spent it each month.
- Budgeting makes you feel like you got a raise. I mean, the average EveryDollar user says they find $332 in their first month using this budgeting tool. That’s money that was getting spent on who knows what before—but now you get to decide where it goes.
- If you’re the type who feels bad when you spend money, you can shop without guilt knowing that expense is already in the budget. You’re just following the plan!
- No matter what money goal you’re working on—whether that’s getting out of debt, saving for retirement, saving for a vacation, or just trying to keep your grocery bill from getting out of hand—budgeting is how you get there.
How Can I Make a Budget Quickly?
The quickest way to set up (and stick to) a budget is by using our free budgeting tool I keep mentioning. WithEveryDollar, you can map out next month’s budget so quickly—and keep up with it so easily!
Time to Use These Budgeting Tips!
Okay, now that I’ve told you about EveryDollar and you know some of my favorite budgeting tips and tricks, it’s time to get after it.
And remember: When you realize the purpose of budgeting isn’t to limit your freedom but to give you freedom, you’ll be on the road to loving your life and your bank account! That’s what we call winning with money.
Budget Quicker (and Easier)
Here’s a budgeting tip you can start right now: Get EveryDollar! Make setting up (and sticking to) a budget way easier. Every single month!
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About the author
Rachel Cruze is a #1New York Timesbestselling author, financial expert, and host ofThe Rachel Cruze Show. Rachel writes and speaks on personal finances, budgeting, investing and money trends. As a co-host of The Ramsey Show, America’s second-largest talk radio show, Rachel reaches millions of weekly listeners with her personal finance advice. She has appeared on Good Morning America and Fox News and has been featured in publications such as Time, Real Simpleand Women’s Health magazines. Through her shows, books, syndicated columns and speaking events, Rachel shares fun, practical ways to take control of your money and create a life you love. Learn More.
As an enthusiast and expert in personal finance and budgeting, I understand the significance of effective money management in achieving financial goals. My expertise extends to various budgeting methods and strategies, and I've closely followed the insights shared by financial experts in the field. Now, let's delve into the key concepts discussed in the article by Rachel Cruze:
- A budget is emphasized as a plan for managing one's money effectively.
- Contrary to the negative connotation associated with budgeting, it's highlighted as a tool that provides freedom by allowing individuals to take control of their finances.
- The article introduces the concept of a zero-based budget, where every dollar earned is assigned a specific purpose.
- The aim is to ensure that income minus expenses equals zero, preventing money from slipping through the cracks unintentionally.
- The article provides 15 practical budgeting tips, including starting with the most important categories, doing the budget together with a partner, and being prepared for different monthly expenses.
- Emphasis is placed on paying off debt using the debt snowball method and the 7 Baby Steps to achieve financial freedom.
Trimming the Budget:
- In cases of financial tightness, the article recommends making budget cuts such as reducing streaming services, dining out less, and shopping at discount stores.
- Budget cuts are presented as temporary adjustments that can be revisited later.
- Setting up automatic drafts for bills is encouraged to save time and reduce stress.
- Caution is advised to pay attention to cash flow to avoid overdrafting when multiple auto drafts coincide.
- The importance of having financial goals, such as paying off debts or building an emergency fund, is highlighted.
- Setting goals, making them visible, and giving them a timeline are suggested for staying motivated.
- Regularly tracking progress toward financial goals is recommended.
- Monthly budget meetings serve as a platform to celebrate achievements and address areas for improvement.
Miscellaneous Line in Budget:
- The article suggests allocating a small amount for unexpected expenses in a miscellaneous category in the budget.
- If certain expenses consistently fall into this category, the recommendation is to consider creating a dedicated budget line for them.
Avoiding Credit Cards:
- The advice is given to cut up credit cards and stop using them, emphasizing the drawbacks of relying on credit for financial management.
- Cash is recommended for certain budget categories, especially if overspending is a concern.
- The envelope system is mentioned as a method to hold oneself accountable for budgeted amounts.
Online Budget Tools:
- The article suggests embracing modern budgeting tools like EveryDollar for convenient planning and tracking, particularly for couples syncing their budgets.
Contentment and Avoiding Comparisons:
- The importance of contentment and avoiding comparisons with others is stressed.
- Comparisons are portrayed as potential joy and paycheck robbers.
Giving Yourself Grace:
- Budgeting is acknowledged as a process that takes time to master.
- The importance of giving oneself grace and learning from mistakes is emphasized.
Steps to Make a Budget:
- The article outlines five steps to create a budget: listing income, listing expenses, subtracting expenses from income, tracking transactions, and creating a new budget for the upcoming month.
Budgeting with Inconsistent Income:
- Tips are provided for individuals with irregular incomes, including planning for low-earning months and adjusting the budget based on actual income.
Benefits of Budgeting:
- The article enumerates several benefits of budgeting, such as clarity on where money is going, feeling like you got a raise, guilt-free spending within the budget, and achieving various financial goals.
- EveryDollar is highlighted as a budgeting tool that automates the budgeting process, making it easier for users to follow the outlined steps.
Quick Budgeting with EveryDollar:
- The article suggests that using EveryDollar can expedite the budgeting process, making it quicker and easier to set up and adhere to a budget.
- Rachel Cruze is introduced as a #1 New York Times bestselling author, financial expert, and host of The Rachel Cruze Show.
- Her background and expertise in personal finance, budgeting, and money trends are highlighted.
In conclusion, the article covers a comprehensive range of budgeting concepts and tips, providing a valuable guide for individuals seeking financial stability and success.