Budgeting for personal expenses is one of the most important things you can do to ensure financial stability. A good budget helps ensure that you’ll have enough money to pay all of your bills, and gives you an idea of how much money you have left over at the end of each month. Saving money is important too, and a solid budget will show you just how much you are spending on each necessity or luxury.
In order to live the life you want (and deserve) you will have to make sacrifices — it’s just a fact of life. You must cut out the things that take away from your long-term financial goals, even if it means inconvenience during the current period of your life. This can be tough at first, but once you start to see some results, it becomes easier. Here are some proven personal budgeting practices I’ve adapted over the years that have made all the difference in my ability to save money and achieve my long-term financial goals. It’s easy to get into the habit of spending, but it doesn’t have to be. By applying the following ten practical personal budgeting tips, you can stay on track with your finances and make your money work for you. Not just anybody (i.e. me) can say that they are living debt-free, but for anyone who has ever tried it before, most know that it is almost impossible to do without a budget.
If you are struggling to keep on top of your bills and manage your money, then we’ve got the personal budgeting solutions for you. This article will teach you how to create a spending plan, develop a realistic budget and even teach you some tips that can help you save more.
Personal budgeting practices don’t always come naturally. You may struggle with knowing exactly how much to save, what purchases should be made, and where to draw the line. But I’m here to help! Here are some of the best tips I’ve learned over the years for establishing and maintaining a successful personal budget. While everyone needs a budget, it can be hard to craft one that works as we progress through our lives. Basically, these personal budgeting practices are essential and relevant for all sorts of people. If you’re just starting out with a job or trying to manage your own money for the first time, there are best practices that will help you get started — or keep you going — on the right track.
How Can Budgeting Help Me?
A budget is going to give you an action plan and clear picture of where your money is ending up each month. Budgeting will help you achieve the goals you’re working toward—whether that’s getting out of debt, saving for retirement, or just trying to keep your grocery bill from getting out of hand.
When you see planning a budget as simply spending your money intentionally, you can actually find more freedom to spend! Once something has been budgeted for, you’ll be able to spend that money without feeling guilty. Many people even say they find “extra” money after they create a realistic budget and stick with it. How amazing is that?
Start with a goal.
When you work toward a goal, you’re more likely to achieve it. You can’t just throw money at the problem or hope something will work itself out; you have to do the hard work of figuring out what exactly it is that you want and then working toward that goal.
Start with a real number in mind—what would make your life better? Saving $5,000 in your emergency fund? Buying a new car? Paying off all of your credit card debt? Whatever it is, make sure that when it’s done, there’s an actual feeling of accomplishment in having achieved something tangible.
If your goal isn’t tangible enough yet (or even if it is), try writing down specific ways in which achieving this goal will improve things for yourself: “I’ll finally feel secure about my finances.” “I can go on vacation next year.” “I won’t have to worry about where I’m going to find rent money anymore.” Write down ten things like this—and then make them happen!
Prepare your budget.
- Write down your expenses.
- Write down your income
- Find out how much you are spending and earning. To do this, create a list of all your monthly bills, then subtract the amount you earn from that month’s paychecks (or take an average over several months). This will give you a good idea of how much money is coming in each month versus going out.
- Find out how much you are really spending on each item by writing down every time you spend money during a normal day or week (e.g., coffee with friends after work, pizza for dinner) and what it cost at the time of purchase (e.g., $4 for coffee, $8 for pizza).
Create a budget.
The first step to creating a budget is establishing a baseline. To do this, you’ll want to list all of your monthly expenses and income—no matter how small or large they may be. This should include everything from rent or mortgage payments to cellphone bills, utility bills and credit card payments (yes, even if you pay them off every month). Next, determine the amount of money that you have leftover after paying all these things each month. Then set a goal for yourself: What would it take for you to reach financial independence? Would that mean saving up enough money so that you could quit your job? Or perhaps being able to pay off all debts once and for all? Calculate how much money this would require based on your current budgeting practices; then determine whether or not those practices work well enough in order for them both to achieve this goal while still maintaining some level of enjoyment from life (and remember: tracking what exactly how much money goes into which categories will help get there). Once this has been done several times successfully over time (i.e., when tracking shows spending patterns), then create an actual budget based on those numbers—but make sure it works for each person individually!
Follow your budget.
It’s important to be aware of your budget at all times. The best way to do that is to plan for each purchase, whether it’s a daily cup of coffee or an annual vacation. This may seem tedious, but if you’re prepared and have set aside funds for these expenses ahead of time, it will be much easier for you to stick with your budget.
Commitment is another important factor in effective budgeting. Take the time before writing up your budget to think about what kind of lifestyle you want and how much money you need in order to live comfortably within those parameters. If there are certain things that are outside this range—for example, if there’s a pair of shoes that’s not on sale but which would make me happy—ask yourself if they’re really worth sacrificing everything else in exchange for them? Remember: A good life is built on happiness rather than consumerism!
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. Regardless of the occasion, make sure you prepare for those expenses in the budget. Keep those special occasions from sneaking up on you by pulling up your calendar while you’re creating your budget. (Hint: Christmas is in December again this year, guys!)
Be sure to adjust your budget each month as things change. Make a savings fund you can stash cash in throughout the year. When you don’t have a plan, you’re going to be stressed. And that takes all the fun out of giving and celebrating. No one wants that!
Adjust your budget when necessary.
So you’ve started a budget, but what happens if something goes wrong? If you can’t pay off your credit card in full each month, for example, or your car needs repairs. It’s important to stay flexible and adjust your budget accordingly. At least once a month (more often if necessary), review the spending categories in your budget to make sure they are still valid and make any necessary adjustments.
Of course, some things that cause changes in our lives are out of our control—like when we get married or divorced, have children or go through a major life change such as starting school again after being out for a while—and those will require more than just an adjustment in how we spend our money! However, even these situations may not necessarily require us to give up on the idea of having some sort of plan or goal when it comes down to making choices about what we do with those newly acquired resources: simply put there’s no reason why “I’m married now so I should buy everything new instead” should become an excuse not
to save money because there won’t be room left over at the end of every paycheck after paying bills plus rent/mortgage payments anymore (even though buying used furniture might be cheaper).
Cut up your credit cards.
If you’re really committed to sticking to a budget and getting out of debt, you 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 them out of your life.
Having no credit card debt will mean no more minimum payments to add to the budget, zero hassle with fees or high-interest rates, and much less stress and worry. Stick to using your debit card (and even cash!) and dump those credit cards like your ninth-grade fling. You know what the great thing about a debit card is? The money comes straight out of your bank account! There’s no middleman charging you 15% interest.
Use cash for 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 the envelope system to 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.
Track receipts and spending
- Track your expenses.
- Define what you are tracking.
- Track expenses by category, date and amount.
- Decide on a time frame for tracking and stick to it.
- Decide when you will be tracking (morning or night).
- Choose a tool that works best for you, whether that is paper or online tools such as Mint or YNAB (You Need A Budget).
It’s possible to stick to a personal budget, but you need to make them carefully!
A personal budget is an essential tool for financial freedom. It’s possible to stick to a personal budget, but you need to make them carefully. There are several factors that will affect your ability to stick with a household or family budget:
- How much income you earn and how much debt you have
- Your spending habits, including how much money you spend on food versus entertainment, clothing, etc.
- Your goals for retirement and other savings accounts (like an emergency fund)
Best Personal Budgeting Practices, you have had a look at some interesting facts you may not know about personal budgeting practices. There’s no need to suffer from either an over-abundance or a lack of funds in your life when there are so many simple ways to practice best budgeting practices. Budgeting is a process of managing money spent and saved. A budget helps you to plan for the future with clarity and to prioritize your spending toward what’s important to you. It also keeps you from overspending or underspending in certain areas — so that expenses match your income.
Personal budgeting is the practice of managing money to make sure you have enough income to cover your living expenses and debts. Budgeting allows you to plan your future spending, decide what’s important to you, reduce debt and stress, and make it easier to save for the things that matter most.