17 Budgeting Tips for Beginners—Budgets You Can Actually Stick To
Updated · Nov 17, 2022
Every day, you need to make decisions about how to spend your hard-earned money.
Should I buy a coffee or put that money in my savings?
Should I spend $100 on dinner with friends or eat at home and go out for one drink?
All of these choices depend on one thing: your budget. If you learn how to manage it wisely, you’ll be able to afford anything you want in the future.
But how do you go from wasteful spending to smart financial planning?
The first steps are the hardest. That’s why we created this comprehensive list of budgeting tips for beginners.
Here’s some of what you’ll see:
- Set meaningful goals
- Keep yourself accountable
- Use visualizations
- Budget your time
- And more
Read on to learn how to make your first budget plan and stick to it.
What Is a Budget and Why Do You Need One?
A budget is a plan for your money. It helps you track your income and expenses so you can make informed decisions about your finances. Without a budget, it's easy to overspend and get into debt.
The benefits of budgeting are numerous:
- You’ll know where your paycheck is going
- You’ll avoid debt
- You can save for important goals, like buying a car or retirement
- Most importantly, it’ll give you peace of mind
If you've never tried budget planning before, it might seem overwhelming at first. But it doesn't have to be complicated or time-consuming. It just takes a little bit of effort upfront and some self-discipline to stick to it in the long run.
Besides, there are plenty of resources available to help you get started. There are books on personal finances, apps and templates for budgeting, and even professional financial advisors.
But it’s better to start small and build up your knowledge gradually.
Where to begin? Read on for our suggestions.
How to Make a Budget Plan That Works for You?
When it comes to budgeting, one size doesn’t fit all.
In order to create a budget that works for you, you need to take into account your income, expenses, and goals.
Here’s how to do that:
Budgeting Tip #1: Set Goals That Are Truly Important to You
What do you want to achieve with your budget?
Do you want to buy a house?
Pay off your debt?
Have more money for traveling?
Knowing what you want to achieve will help you make better decisions about spending and saving.
If you’re just following some generic advice saying you need an emergency fund, you’ll quickly lose your motivation.
But if you know you’re saving for your dream house, you’ll keep going even when things get hard.
Budgeting Tip #2: Keep Yourself Accountable
Tracking your expenses is important, not just because it gives you an accurate picture of your spending habits. It also makes you aware of where your money goes.
Make a detailed budget breakdown and write down every penny that goes into dining out, transportation, and beauty products.
Knowing 5% of your salary goes to Starbucks will make you think twice before you buy that double mocha soy latte next time.
Budgeting Tip #3: Prioritize
Now that you know how much money you have coming in and going out, it's time to decide what's important to you.
You can’t save money from every expense category. But you also can’t keep your spending habits the same and expect something to change.
Start by determining the expenses you can’t avoid, like rent, bills, basic groceries, etc. Then, go over the remaining expenses in your monthly budget and see what you can cut back on.
Budgeting Tip #4: Choose a Budgeting Method That Fits Your Needs
There are lots of different budgeting methods out there. The one that's best for you should fit your individual needs and preferences.
Some people prefer percentage-based systems, like the 50/30/20 rule or Dave Ramsey’s method. The idea is that you allocate a certain percentage of your income to different budget categories, like rent, groceries, and entertainment.
The less disciplined might opt for something like the envelope system. With it, you decide how much you’ll spend on a certain category and put the amount in an envelope.
There are numerous choices out there. Try out different methods and which one is best for you.
How to Start Budgeting?
Setting your goals and making a budget plan isn’t easy.
So if you’ve come this far, well done! But the real challenge is to commit to your budget, especially in the beginning.
Here are a few budgeting tips for beginners:
Budgeting Tip #5: Use Visuals
Research has shown that focusing your gaze on your goal for 60 seconds motivates you to start moving toward it.
So, you can create a dream board with your saving goals (e.g., a collage of pictures of you in Hawaii).
When you need to take a specific action, say, make your budget for the next month, you simply have to look at the board.
Seriously, just focus on it for a minute without averting your gaze. It’ll do wonders for your motivation!
You can also mark your progress visually in your budget planner or spreadsheet. Ticking a box will give you a sense of accomplishment.
This will motivate you to keep working on the next step in your plan to pursue the same feeling.
Budgeting Tip #6: Try Different Budgeting Tools
You can use templates, pen and paper, spreadsheets, cash envelopes, budget planners, budgeting apps, and so on.
Find what works for your personal budget and use it to track your expenses and progress.
Budgeting Tip #7: Look for Support From Family and Friends
Let them know about your plan and ask for their help in sticking to it. They can be a great resource for advice and support.
Plus, it’ll give you a sense that someone is keeping you accountable for your actions.
Budgeting Tip #8: Celebrate Your Success
Reward yourself for sticking to your budget.
Treat yourself to something you enjoy every time you reach a milestone.
This will keep you motivated to continue budgeting.
How to Budget With Irregular Income?
Creating a financial plan can be a little tricky if you don’t know when your next paycheck will come.
But it's far from impossible!
Here’s how to start budgeting with irregular income:
Budgeting Tip #9: Budget Ahead
Calculate your expected monthly income by adding up your paychecks from the past year and dividing the sum by 12.
Or, use your lowest monthly income as a worst-case scenario just to be on the safe side.
Then, calculate your essential monthly expenses—rent, bills, food, and transportation.
If your lowest monthly income doesn’t cover that, you’ll need to save the rest.
Budgeting Tip #10: Think in Perspective
The best way to create a budget with irregular income is to think a few steps ahead. So, set aside money whenever you get a bigger paycheck.
Budget at least a month ahead so you can have enough to cover your essential needs until your next pay stub.
This will help you handle any unexpected expenses or delays in your payment.
Budgeting Tip #11: Build a Sinking Fund
Saving for emergencies is budgeting 101.
A sinking fund is the next step. It’s like an emergency fund, but you dip your hand into it more often.
It is meant to cover your basic needs and unexpected expenses whenever your monthly income isn't enough. Set aside a larger sum in it and refill it whenever you get a bigger paycheck.
Budgeting Tip #13: Budget Your Time
Time is money, so beware of how you’re spending both. If you have an irregular income, you probably have an irregular schedule, too.
If you organize your time better, you might be able to squeeze in a side hustle. This doesn’t necessarily have to be a second job. After all, you need to relax and have fun as well.
But you can find ways to make money from your hobbies. Or do that business course you’ve been postponing for ages. Or read a book on managing your finances.
You get the idea. Spend your free time wisely.
Why Budgets Fail and How to Avoid Failure?
There are many reasons why people fail at budgeting.
- Unrealistic plans and goals
- Not enough wiggle room in the budget
- Losing motivation over time
Here are some more budgeting tips to help you handle these issues:
Budgeting Tip #14: Start Small and Build Up
Gradually increase your goals as you get more comfortable with your budget.
Don't try to do too much too soon.
Be patient and flexible.
Rome wasn't built in a day, and neither will your healthier spending habits.
Budgeting Tip #15: Allow For Some Discretionary Spending
The best way to budget is to set aside some money for things you enjoy.
This will prevent feelings of deprivation and frustration.
After all, one of the purposes of smart money management is to obtain the things we want more often than not.
Budgeting Tip #16: Cut Yourself Some Slack
Don’t expect to get it right the first time.
Remember that your goals are long-term. Sure, every penny saved and spent counts.
But it’s the overall effort that makes or breaks your budget.
Mishaps and unexpected overspending are bound to happen. Don't beat yourself up but find the resilience to return to your budget as quickly as possible.
Budgeting Tip #17: Re-Evaluate Your Budget Regularly
Maybe your income has changed. Perhaps you have more expenses (or the economy is collapsing, and the prices are increasing).
Or your priorities have changed.
Whatever the reason, revising your budget regularly is essential.
It helps you keep it realistic and maintain your motivation to stick to it. We suggest you do it every month.
If you're just starting out, budgeting can seem like a daunting task. But with a few simple tricks, you can make the perfect budget for you and your family.
Follow our budgeting tips for beginners above, and you’ll quickly get your finances in order.
With an eye for research, Aleksandra is determined to always get to the bottom of things. If there’s a glitch in the system, she’ll find it and make sure you know about it.