More people are budgeting than ever before, and for good reason! Budgets help you stay on track with your financial goals, highlight areas where you might want to spend less, help prepare you for financial emergencies, and more!
It’s clear that budgeting has benefits, but there’s a lot of work to do upfront before you can reap those rewards.
If you’re considering making a budget for the first time, and need some quick budgeting tips to help you start things off on the right foot, you’ve come to the right place.
Tip 1: Start with a template
One of the first steps of making a budget is figuring out which budget categories, or Envelopes, you want to track. But if you’ve never had a budget before, that’s quite a tricky task.
Start with a template instead! A template or sample budget can help give you an idea of the kinds of expenses you might want to track. Plus, sample budgets can help you visualize how detailed you might want your own budget to be. Don’t want to track 50 different categories? Then maybe a simple budget is the way to go for you.
Tip 2: Make a 50/30/20 budget
Have financial goals you want to work on, like paying down debt or saving for a downpayment on a home? Use the 50/30/20 budget model.
The 50/30/20 budget recommends breaking your expenses into three chunks. The largest chunk, at 50%, goes towards needs (like rent or groceries), the second largest, or 30%, goes towards wants (like eating out or hobbies), and the smallest chunk, the remaining 20%, is set aside for savings or debt reduction.
Tip 3: Make room for fun!
It’s important to remember that budgets aren’t rigid structures set in place to make you feel deprived and restricted. But that can certainly happen if you don’t leave any room for fun.
So be sure to set a realistic budget for your Fun Money category. That way, when friends ask you to go to the movies, you’ll feel comforted knowing you have the money set aside.
Tip 4: Start saving for less frequent expenses
Budgets aren’t just good for regular expenses that come every month, like rent or groceries. They’re also perfect for planning for those expenses that come less frequently. You know, the ones like property taxes, Christmas gifts, or doctor’s appointments.
Those are the kinds of expenses that are easily forgotten because they happen infrequently. By not saving for those expenses, you’re at risk of dipping into savings when one does come around.
Tip 5: Review and make adjustments
If you’re new to budgeting, chances are you’ll have to make tweaks here and there until you find the numbers and categories that work best for you.
After you’ve had your budget for at least a month, set aside some time to analyze the numbers to see how you did.
Spent more on eating out than you planned? No worries, update that budget to make it match what you’re actually spending. Just keep in mind that you might need to reduce a budget somewhere else.
Tip 6: Give yourself grace!
This might be the most important tip on the list today. It’s a reminder to not beat yourself up when things don’t go to plan.
Crafting a budget and sticking to it takes time and practice. And we’ll let you in on a little secret: nobody perfectly sticks to their budget every single time!
Remember to give yourself grace when the flubs happen… because they will.
Now that you know all the tips and tricks to making a budget, get started on yours now!