12 Budgeting Tips to Help You Win With Money
When a plan works we’re more likely to stick with it, aren’t we?
We’ll happily forgo our Friday morning donut ritual if it means feeling better and getting stronger. But practicing discipline with zero results? Well . . . bring on the donuts.
Around here, we know budgeting works. And our goal is to help you find ways to make budgeting so compelling that you can’t wait to sit down and look at the numbers. We’re crazy like that! So stick around and we’ll show you a few tips and tricks of the trade.
A Few Insider Secrets About Budgeting
Lean in close. We’re going to let you in on some classified budgeting information. Ready? Here goes . . .
- Budgeting can be easy. With the EveryDollar app you can create a budget in just minutes a month.
- Budgeting is for everyone. The wealthy and the broke. The nerd and the free spirit. The spender and the saver. Everyone.
- Budgeting works. A budget tells your money where to go, helping you reach—and maybe even exceed—your money goals.
So what’s the most important budgeting tip we have to offer? Believe the hype—budgeting really does work! For a few more, check out the list below.
Take Your Budget to the Next Level With These 12 Easy Tips
1. Budget before the month begins. A true budget is focused on the future, allowing you to plan for what’s ahead instead of struggling to keep up with what’s behind. So don’t wait for the first day of the month to begin your budget. Make a habit of completing next month’s budget before this month ends.
2. Budget to zero. Give every single dollar a name. Make $4,000 in one month’s time? Budget for the entire amount. Leave no stone unturned until your income minus your outgo equals zero. When every dollar has a job to do, you become the boss. You tell your money what to do instead of wondering where it went.
3. Track every expense. Keep a close eye on your transactions throughout the month. After all, a budget won’t do you any good unless you stick to it. And the only way you’ll know how you’re doing is to update your budget after you spend money! Sign up for EveryDollar Plus to connect your bank account and easily assign your transactions into individual budget categories.
4. Make adjustments. You’re the boss of your money, remember? If something comes up, you have the power to move your money around. Need new pants for work, but you’re out of clothing money? You don’t have to blow your budget or go without. Look to see if there’s a category where you have a little extra money. Maybe you have a lower-than-normal electric bill this month, or you can pull some cash from a category like entertainment or restaurants.
5. Create a miscellaneous category. Miscellaneous money is our friend. Because try as we might, we can never seem to peg down exactly how the month will go. So put some money in a whatever-comes-up category. That way you can replace burnt-out lightbulbs or pick up a last-minute birthday card without worry or hassle!
6. Budget for semi-annual expenses. You can create a simple sinking fund in EveryDollar to save for unexpected, overlooked and semi-annual expenses. We’re talking about vet checkups, car insurance and membership fees. Set aside a small amount each month and that big bill, when it finally comes, won’t hurt so much.
7. Save for big purchases. Doesn’t it seem like our enjoyment of the Christmas season or summer vacation directly correlates to how far in advance we saved for them? That’s because a frantic scramble to pull together funds can wear us down and make us feel bitter about the big event before it even begins. Instead, treat Christmas, vacations, or that home improvement project like a monthly fee and save for it.
8. Budget for fun. Of course, we can’t just save for the fun we’ll have sometime in the future. You need fun now! Make temptation less tempting. Stay sane and budget for fun by giving yourself a set amount of money to spend however you like. This tip may look different depending on which Baby Step you’re working on. If you’re still paying off debt or building your emergency fund, you might want to keep this category small. Bottom line: give yourself room for little indulgences like your favorite coffee treat or a magazine at the grocery store.
9. Update your budget every month. Some budget categories will stay the same each month, while others change—and that’s okay! EveryDollar automatically copies last month’s budget. All you’ll need to do to get the next month squared away is to look it over and make adjustments accordingly. Base these adjustments on where you overspent (or underspent!) last month.
10. Understand needs and wants. You might want a new guitar, but you actually need to fix your home’s heater. If you can afford to do both, great! Although sometimes we have to wrestle with decisions about how to spend our money wisely. Recognize the difference between your needs and your wants, and both you and your budget will benefit.
11. Set a realistic budget. Your budget is meant to be a straightforward plan you can execute with relative ease. For example, if you know you’ll never get by on a monthly food budget of $300, move some money around until you feel certain you can make your food budget work. You could also reduce your grocery budget slowly—maybe by $20 a month—until you reach your intended goal.
12. Give yourself grace. Like any new eating or exercise plan, it takes a little time for budgeting to click and begin to feel like a normal part of life. Most people start to settle in around three months, but don’t be worried if it takes you a bit longer. Adjust numbers as you go, and cut yourself some slack when you mess up. After all, budgeting takes practice.
Budget Tip FAQs
I’m having trouble getting my budget to zero. Does this part really matter?
When a new budgeter hits zero on the first try, we call it beginner’s luck. That’s because it can feel a bit strange to give every single dollar a name, and almost more comforting to leave a little extra cash lying around. But just trust us on this one—extra cash lying around usually ends up lost.
You’ll spend it at the gas station, out to dinner with friends, on a new shirt or book—all the while walking around with a false sense of security you think your budgeting cushion brings.
Instead, dig deep to hit zero. Jot down everything you might possibly spend your money on next month and assign that category a dollar amount. When you’re certain you’ve covered every expense, it’s time to beef up other categories like debt payment, savings, miscellaneous or fun.
I know it’s okay to make adjustments, but I’m making them every month all month long. What gives?
What we have here is a classic case of the ideal budget. We’ve all been there and done that, friends. What you’re trying to create is a spending wish list instead of a firm plan. No worries! You just need a more realistic budget, and to do that, see tip 11 above.
Essentially, you’ll want to make all your adjustments now (before the month begins) instead of throughout the month like you’ve been doing. Take some time to make note of what money you’ve moved around and look for patterns.
Are you always over budget in the entertainment category and short on your grocery budget? There’s your answer right there. Make the changes in EveryDollar, and we’ll do the math for you, making sure that everything still hits zero in the end.
How much should I save for a big purchase if I don’t know what it will cost?
Great question! Sometimes an item you’re saving for will have a set price, like a new computer. Other big goals, as you noted, are less obvious. Here’s what we suggest:
Consider what you can afford. Want to take your kids to Disney next year? Instead of looking for an exact cost of a particular package, talk with your spouse to determine what you’re both willing to spend. Let’s say you agree to spend $2,500. Set aside $210 a month for the next year, and when the time comes, do your homework to find options that fit what you saved.
Now go put your fine-tuned plan to work and hop on Facebook to show us your results.