Budgeting often gets a bad reputation for being difficult.
But whether you find them difficult to make or difficult to keep, a budget will do you no good if you resist it.
The more arbitrary you make it, or the more you let other people’s values and perceptions influence it, the less likely it is to work.
So to help you get started creating a budget you can not only keep, but learn to love, I’ve put together these budgeting tips for beginners.
Budgeting Tip #1 – Track Your Spending
My number one budgeting tip for beginners is to track your spending.
I believe awareness is the first step in taking control of your money and improving your financial health.
And the best way to gain awareness is to write down every purchase and expense.
You’ll be amazed at how much that awareness can alter your spending behaviors.
For example, most people have no idea what their monthly expenses are for food.
I have yet to find someone who hasn’t been surprised by the amount they’ve spent on eating out once they start tracking their spending.
Knowing where your money is going is key if you want to make sure it’s going toward your financial goals and the things you value.
Tracking your spending is also a great way to find budget leaks and easy wins if you want to save money fast.
Once you know how much you’ve been spending on food, creating a monthly food budget or a grocery budget becomes a lot easier.
Whether you use budgeting apps like
This forces immediate reflection and accountability.
No more hiding your head in the sand, pretending you’ll pay for it later.
If you’re tracking your expenses in your budget app or with your cash envelope, you can also see at a glance how much money you have left.
Success in budgeting is all about awareness, and tracking your spending is the best way to find out where your money is going and how much is left.
Budgeting Tip #2 -Set Financial Goals
Without goals or a purpose for your money, you’ll always feel a bit lost, and at odds with any budget you try to make.
Sit down and think about what you want for your future.
Is it the perfect house for your family? A nice vacation? Finally paying off those credit cards?
Maybe it’s being able to cover your bills without feeling stressed.
Whatever you want, set a target for achieving it, and integrate it into your budget.
Find out how much to save for a house or the cost of that dream Disney vacation, so you have a clear and specific amount to set as your budget goals.
Making your goals a part of your budget can be as
Incorporating your goals into your budget will help you keep focused on your priorities and start saving immediately.
Take it a step further and add a visual tracking component for your larger goals to make the process a little fun.
Budgeting Tip #3 – Find the Budget Method That Works for You
Another of my favorite budgeting tips for beginners is to figure out what budgeting approach works for you.
Having the right mindset with your money is the foundation for financial success.
Understand that your money goals are unique to you and which budgeting method you choose to help you reach them is irrelevant.
What matters is that you find a budgeting philosophy that helps you stay focused on your financial goals.
There are a number of budgeting methods you can try out to take control of your finances. Some are easier than others, so try them all out before you give up on budgeting altogether.
I’m a massive fan of zero-based budgeting.
It’s more work than some people are willing to do, but it’s the best way to get a grip on your spending and really tune into your core values and desires.
With a zero-based budget, you assign every dollar in your budget. Essentially, every dollar has a “job” you give it.
Money budgeted toward bill pay has the job of paying your bills. Money tucked into a vacation fund has the job of saving itself so you can have a debt-free trip someday.
Zero-based budgeting allows you to have complete control over what you choose to do with your money and make sure it’s working toward your goals.
Percentage Based Budgeting
If you prefer to keep things
The 50-30-20 budget method is a good place to start for ensuring you’re spending less than you earn, and still saving something while you pay off your debt.
For people who don’t want to track every penny, a percentage-based budget will help you stay aligned to your goals without the pressure of knowing where every single dollar is being spent.
A lot of budgeting beginners gravitate toward this method since it’s relatively easy to implement and doesn’t require spreadsheets or apps to keep track of things.
Cash Envelope System
A common budget tip for beginners is to switch to cash. Adopting the cash envelope system for your budget is a great way to get a grip on your finances.
Studies have shown we spend less when we use cash. If you’re an impulsive spender who struggles with overspending, the cash envelope system may work well for you.
Removing the option to overspend will help you break any negative spending habits and start living within your means.
Budgeting Tip #4 – Review Your Variable Expenses
When we think about our bills, we tend to think about what we paid last month.
This can be dangerous for your budget when it comes to variable expenses like your electric and gas bills.
We live in the desert, so there’s a massive difference between our winter and summer bills.
Even though I know it’s coming, I’m still always a bit surprised when our bill quadruples every summer.
The best way to handle variable expenses like this is to look at your previous bills and average them out across the year.
Instead of setting aside the exact amount due each month, I budget the average.
In the winter, I build up a buffer in those budget categories, so that when summer comes, I don’t have to scramble to find extra cash.
In addition to keeping the stress at bay, it keeps my budget nice and predictable year-round.
Budgeting Tip #5 – Don’t Think Too Far Ahead
The best budgeting tip I ever got is only to budget the money you have, not the money you expect to get.
We tend to think of budgeting on a monthly basis which often leads us to forecast our monthly income in order to pay for everything.
But forecasting your income can lead to spending money before you have it.
Even if you have a regular paycheck coming in, spending it before it’s actually in your bank account perpetuates the paycheck-to-paycheck cycle.
Instead of budgeting monthly, consider budgeting by paycheck.
If you get paid less money, but more frequently, it’s unlikely that you’ll have enough extra money in your accounts to budget out the entire month when you get started.
It’s incredibly frustrating to have more month than money, but you can overcome this by thinking on a smaller scale and adjusting your budgeting period.
To make a more realistic budget for yourself, focus on only the expenses, you have to pay before you get paid again.
By taking things one paycheck at a time, you’re able to get a handle on things without feeling overwhelmed.
Budgeting by paycheck like this is also a great way to build up your savings.
Instead of running out of money trying to stretch one paycheck to pay the whole month, you can focus on what that money needs to do until you get paid again.
Usually, you’ll have enough extra money from at least one paycheck that you can put towards your savings goal.
Budgeting Tip #6 – Use a Monthly Budget Calendar
Forecasting your income and budgeting money you don’t have is a recipe for budget failure.
Your budget is a way for you to assign your money to specific spending jobs.
You can’t pay for something with money you don’t have. Forecasting with imaginary numbers creates a budget you can’t trust.
A monthly budget calendar is a great way to help you break the habit of forecasting your income and start budgeting by paycheck.
It may seem counter-intuitive to use a monthly calendar to help you break free from a monthly budgeting mindset.
But a visual representation of where your bills fall in relation to your paydays actually makes it easier to ignore the non-immediate expenses.
Write in all your monthly payments and paydays on the calendar so you have an overview of the month ahead.
Then adjust your budget to only plan for your immediate upcoming expenses.
Once you get paid again, you can budget out the remainder of the month.
Being able to see what’s coming up before you have to budget for it is a great way to break the paycheck-to-paycheck cycle.
Budgeting Tip #7 – Know the Difference Between Infrequent, Unexpected, and Emergency Expenses
One of the first things most financial experts advise is to build up an emergency fund.
While I agree that having an emergency fund is essential and probably the best way to prevent credit card debt, I also think it’s important to define what exactly an “emergency” is.
Christmas, annual renewals, and other semi-regular expenses are not emergencies.
Just because you tend to forget about them doesn’t make them an emergency.
Similarly, while car repairs and maintenance costs may be unexpected since we don’t know when they’ll happen, we do still know they’ll eventually pop up.
These irregular expenses are unexpected but inevitable.
While some unexpected expenses may feel like an emergency, it’s important to keep them in perspective when compared to things like job loss or medical emergencies.
If you want to build a budget you can stick to you need to start anticipating and planning for your infrequent and unexpected, but inevitable expenses.
Set up sinking funds for these expenses in addition to building an emergency fund.
That way you can continue to gradually build your emergency fund instead of continually depleting it.
Budgeting Tip #8 – Focus on Your Priorities
One of the biggest problems people have when trying to stick to a budget is not having defined their priorities.
The impulse to buy what you want, when you want it can quickly and easily derail your budget.
But having a clear purpose driving your spending decisions will make it easier to know which expenses are worthwhile and which you can ruthlessly eliminate.
This is important not just for creating your budget, but also for creating your overall financial plan.
For example, setting a goal of paying off your student loan debt won’t be as easily achieved if you don’t really care about that debt.
For years I rotated credit card debt because paying it off simply wasn’t a priority. Once it became a priority, I was able to focus on that goal and achieve it in a much smaller period of time than if I had been halfway committed.
Knowing what you value makes sticking to a budget much easier.
Determine your priorities and how your spending reflects them.
Pretty soon, you’ll notice yourself refraining from the impulsive discretionary expenses that used to throw you off.
Budgeting Tip #9 – Avoid Impulse Buys
Sometimes even being crystal clear on our goals and priorities isn’t enough to combat that craving for Taco Bell or resist that amazing sale on your favorite jeans.
But while these occasional expenses may seem harmless, they can add up over time.
Assuming you haven’t funded your fun money category or padded your other budgeting categories in anticipation of impulse purchases, there are a few ways you can combat these extra expenses:
Impose a waiting limit on purchases
Force yourself to wait 24 hours, or 30 days for more expensive items before you commit to buying.
This self-imposed waiting time can have several positive effects. It can:
- prompt you to do more research
- encourage you to comparison shop
- give you time to reflect on how it fits into your priorities
- reduce the desire for the item
- give you more time to budget for it
Giving yourself time to reflect on your purchase will reinforce your efforts to be intentional with your spending.
Set spending limits
Creating your own set of financial rules dictating what and how you can spend may help you curb impulsive spending decisions.
For example, I highly recommend everyone have some sort of Fun Money budget category that they can use for whatever they want.
Depending on your income and expenses, the amount you contribute to your Fun Money category will vary, but those extra funds give you the freedom to indulge a bit. It’s like a built-in “break” from your spending plan.
Use cash or a separate checking account for everyday expenses
By separating your spending money from your bills money, you can ensure that you never miss a payment or overdraft your accounts.
If you’re struggling to stick to your budget, separating your funds and spending from dedicated accounts will prevent you from overspending while also ensuring you can put money into savings accounts without the risk of spending it.
Even with these tactics, you may still end up spending on things that don’t necessarily align with your values or long-term goals. But by establishing a way to give yourself permission, you’ll feel better about it and more confident in your decision.
Budgeting Tip #10 – Negotiate Your Bills
One of the hardest parts about budgeting is not having enough money to actually budget.
We’ve discussed adjusting the frequency of your budgeting so that you aren’t overwhelmed by upcoming expenses. But another way to ease the pain is to reduce those expenses.
Take a look through your credit card statements and bank statements to see what bills you’ve been spending your money on.
You may have some bills that are mandatory for your way of life. Cell phones and the internet used to be relatively optional, but nowadays, it’d be hard to imagine life without them.
But that doesn’t mean you have to pay full price for them.
Call around and price check other services; then call your company and see if they’ll negotiate your rate.
Sometimes they may not budge, and you’ll have to decide if you want to switch services. More often than not, they’ll find some sort of deal that you qualify for that can save you money instantly.
Budgeting Tip #11 – Be Flexible
My #1 tip for anybody struggling to budget is to be flexible. One of the most common budgeting mistakes is to assume your budget is set in stone.
Understand that unexpected things will come up, and you’ll need to adjust to compensate for them.
For years I was frustrated because our budget varied from month to month. I was expecting certain expenses based on the previous month, but things never seemed to add up the same way twice.
It took me a while, but eventually, I realized that there’s no such thing as a typical month.
Even if you think you’ve accounted for every possible scenario, I can guarantee you something you didn’t anticipate can (and usually will) come up.
Instead of throwing your carefully crafted budget into disarray, be prepared to adjust and adapt when things don’t go according to plan.
Budgeting can be a scary and overwhelming concept for a lot of us.
There are so many budgeting tools and guides to personal finance that it’s daunting just to know where to get started.
Use what you’ve learned to navigate any roadblocks that pop up so you can make sure to adjust your course and reach your goals without abandoning your budget.
If you follow these budgeting tips for beginners, you’ll be budgeting like a pro in no time.