13 Tips For Personal Budgeting
By: Jordan Goulet
Tags: Money, Budget, Budgeting, Money Management, Tips

Thinking of starting a budget?

Started a budget but find it a tad difficult?

No Worries! Budgeting can be challenging, especially if you are just starting out. I will share some important tips to help you succeed with your budget.

1. Use Zero-Based Budgeting

Zero-based budgeting is an effective way to organize your finances. Basically, you figure out your monthly earnings. Then you figure out your monthly expenses, savings, and investments. Then you compare your earnings and expenses and the difference should be zero.

This does not mean you must spend all your money! A budget helps prevent overspending and helps save money. So don’t look at the extra money as disposable cash. Use it to make extra payments for existing debt, an emergency fund, retirement, or investments.

Make sure you delegate ALL your money, don’t leave a dime behind!

Recommended tool: Pocket Budgeter’s Budgeting Tool

2. Focus On Paying Off Your Debt

If you have existing debt, your budget should revolve around paying that debt off as soon as possible. Make sure you always have at least the minimum payments set aside each month. If you can, find a way to squeeze in some extra payments, it will help you out tremendously. The quicker you pay off your debt, the less money is taking from you in interest.

3. Be On The Same Page As Your Significant Other

If your finances are intertwined with someone else, it is important that you are on the same page financially. Do not create your budget alone, make sure you do it as a team. Take your time and listen to each other’s opinions and suggestions.

Understanding your financial situation and budget as a team will significantly increase your chance of successfully controlling your finances.

4. Realize Every Month Is Different

It is no surprise that some months, in general, will have either higher or lower expenses and earnings. Everyone’s expenses usually peak around the holidays due to gifts, food, and get-togethers. Months, where you have more birthdays or weddings, will increase expenses. Months with three paychecks instead of two will increase your earnings. Winters will increase expenditure due to the heating of your home.

You must understand that you will have to manage your budget from month to month.

5. Periodically Adjust Your Budget (Monthly)

As described in the previous point, every month is different. Thus, you must periodically adjust your budget to compensate. Not only due to the fluctuating months, but life is full of changes. You acquire a new hobby, your income changes, your commute changes to work, etc.

If you analyze your budget frequently, you will be able to manage your budget more effectively and have more control over your finances.

6. Create a Routine

Create a routine to maintain your budget. Here are a few examples:

Every time you make a purchase (big or small), have a way to track it immediately so you don’t forget.

On the first day of every month, review your budget, and make adjustments.

Every Sunday, check the progress on your budgeting goals and adjust your spending accordingly.

7. Track and Record Everything

Make sure you don’t leave anything behind. If you make a tip at work, make sure you track it. If you pick up a pack of gum from the store, make sure you track it. Any purchase or earning, big or small, is significant and adds up when you are tracking your finances.

The only way to successfully manage your money is to understand where all your money is going and where it’s coming from. Failing to do so can cause some surprises and misunderstandings in your budget.

8. Be Very Specific With Your Budget Categories

Make sure you break down your budget categories as specific as possible. I would recommend using main categories and sub categories. Here are some examples:

FOOD would be your main category and your sub categories would be GROCERIES, FAST FOOD, RESTAURANTS, JUNK FOOD

ENTERTAINMENT would be your main category and you sub categories would be GAMING, MOVIES, GOING OUT

By doing this, you can see how much you spend on FOOD and ENTERTAINMENT. When the time comes to adjust these categories’ budget, you will have a better idea specifically where the modifications need to happen, which would be the sub categories.

Goals should be set for each sub category and the goal for the main category should be the sum of goals of the sub categories.

Recommended: Check this breakdown of categories to help you get started.

9. Set Clear Goals and Be Truthful

Setting goals is crucial to a healthy budget. However, people tend to be dishonest about their goals and set them unrealistically. By doing this, it unmotivated people and they lose the urge to continue to budget.

If you spend money on something you feel you don’t want to (such as bad habits or impulse purchases), make sure you still set a budget for it. Don’t set the goal to $0 a month, make it something more realistic. If you want to eliminate a habit, take it one step at a time. Reduce the goal over time, don’t do it cold turkey since it may destroy your entire budget.

10. Be Patient and Don’t Be Too Hard On Yourself

Budgeting takes time. First, you have to create a habit by tracking where all your money goes. Then, you have the set goals, which you may or may not achieve. Don’t worry about it if it doesn’t work the first few times. Make adjustments. Work on creating an effective habit. If you mismanaged a month of budgeting, that’s fine! Learn from your mistakes and do it better the following month.

11. Understand Your Needs and Wants

Make sure you budget enough money for your needs, but also your wants. We all have passions, we all look forward to doing things we like. Make sure you budget for everything you want and need. But what if you want and need more than you can afford? Use this simple rule of thumb: the 50/30/20 rule. This rule says you should spend 50% of your take-home money on needs (such as rent/mortgage, food, utilities, etc), 30% on wants (entertainment, going out, hobbies, etc), and 20% on savings and paying off debt.

12. If You Can, Automate, But Not Everything

It is tedious to input all your earnings and expenses. However, it is highly encouraged to do it manually initially to start to create a budgeting habit. Once you have an effective routine, it is nice to automate some of the inputting of earnings and expenses. A way to connect your bank account to your budget tracker will save you tons of time.

However, always keep some kind of manual aspect in your budgeting. For example, a transaction could automatically be uploaded to your budget, but you should manually categorize it. This helps you keep an active mindset and conscious of your spending and earnings.

13. Have Fun With It!

Don’t think of budgeting as a chore but a fun activity. With a well-managed budget, you will be able to afford the things you always wanted. It could be a vacation abroad, a new VR set, upgrading your current living arrangements. A budget should get you excited about the future. It also helps you save and feel more secure with emergency funds, savings, and retirement funds.

It could also be seen as a game, trying to hit your monthly goals, or paying off debt sooner than you thought.

Remember, a budget doesn’t limit your freedom, it gives you freedom.

Pocket Budgeter

Pocket Budgeter aligns really well with everything discussed in this post. It was designed to make budgeting as simple and effective as possible. If you want to create a successful budget, maintain a good habit, and achieve your budgeting goals, download the app today!

You can find Pocket Budgeter in the App Store here

https://apps.apple.com/us/app/id1528795325

And Google Play here

https://play.google.com/store/apps/details?id=com.pocketbudgeter.pocketbudgeter

Thanks for reading! Until next time.