8 Budgeting Habits To Improve Your Finances (And Simplify Your Life)

By Zach Buchenau

Last Updated: April 15, 2022

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When it comes to personal finance, your budgeting habits are sure to play a key role in either your success or struggle.

With that in mind, here are 8 budgeting habits that will help you save more money and stick to your budget for the long haul.

1) Set Inspiring Financial Goals

One of the biggest reasons why people give up on budgeting is because they don’t have a clear and inspiring reason to stick with it. Without a specific financial goal to work towards, it’s easy to get discouraged and give up on the whole process.

To stay motivated, start by setting some inspiring financial goals. It could be anything from saving up for a big purchase, like a new car or a down payment on a house, to paying off all your debt within a year.

Even something as simple as increasing your retirement investing rate to 20% of your income can be inspiring for the right person.

Ultimately, the idea is to set goals that are so powerful, that they will make you want to wake up and log your expenses into your budget every day.

I realize that might sound a little bit silly, but the truth is, when you create a budget but fail to set inspiring goals, you are much more likely to give up on the whole process.

8 highly-effective budgeting habits to improve your finances | Be The Budget

2) Work Backwards

The goal of budgeting isn’t just to cut your spending and save as much money as possible. Rather, your goal should be to use your budget to help you achieve your biggest, most exciting goals.

That’s why, one of the best budgeting habits you can adopt, is to work backwards from your goals and structure your budget to achieve them in a specific timeline.

For instance, if one of your financial goals is to save a $20,000 emergency fund over the next 12 months, then you’ll need to save approximately $1,667 per month. That’s the easy part.

The hard part is breaking down your budget, cutting expenses, and maybe even assessing how much extra income you need to earn each month in order to achieve your goal.

Basically, when you work backward from your goals, you get a clear vision of what it will take to achieve them and you can reverse engineer your budget to make it happen.

3) Give Yourself Some Wiggle Room

No matter how much you plan and prepare, there will always be unexpected expenses that pop up throughout the month. That’s why, whenever you set up your monthly budget, we recommend adding a category for miscellaneous expenses.

To be clear, this budgeting category shouldn’t take the place of your emergency fund. Rather, this is just a line item in your budget that can provide you with a little wiggle room for expenses that you either forgot to include or just couldn’t predict.

In our own budget, miscellaneous expenses often cover things like small (non-emergency) home updates and repairs, spontaneous activities with our kids, or even a round of golf here and there.

Since you don’t have the ability to predict the future, it’s always best to give yourself a small cushion in your budget for these types of expenses.

4) Spend From One Account Only

Like any habit, the more complicated it is, the less likely you will be to stick with it.

And when it comes to budgeting, one of the biggest complaints is that it’s just too much work. When there are too many different moving parts, it’s easy to get bogged down and lose control.

To simplify the entire budgeting process (and reduce your likelihood of giving up), we recommend using a single account for all your spending–preferably your checking account.

However, if you just can’t bring yourself to use the Debit-Card-Only rule, (which is what we advocate), then at least pick a single credit card and use that for all your spending.

That way, when it comes time to log expenses into your budget, all you have to do is log into one account.

Seriously, this little tip has been one of the most influential budgeting tips I’ve ever received, and I’m confident it will help you too.

5) Make Consistent, Small Improvements

One of the best budgeting habits you can develop is to improve your budget each and every month. Rather than setting up your budget, and sticking with the same plan for the next 6 months, try to adopt the habit of making small improvements whenever you possibly can.

For instance, if you find that you consistently overspend in the entertainment category, then take some time to figure out why and make adjustments accordingly.

Or, if you realize that you have more wiggle room in your budget than you originally thought, then use that extra money to accelerate your financial goals.

Even a small, seemingly insignificant, improvement can have a large impact on your financial life over the course of time.

So, whenever you go to set up your monthly budget, look back over the previous month, assess what worked, what can be improved, and do your best to make improvements.

Over time, you’ll be amazed how these little improvements compound into significant results.

6) Budget With Your Spouse

There’s no doubt about it, marriage and finance can make for a difficult mix. However, if you want to experience budgeting success, it’s critically important that you get and stay on the same page with your spouse.

In fact, you should plan every month’s budget together, and get in the habit of sitting down at least once a week to assess your progress.

During these budget meetings, you and your spouse should openly discuss any financial concerns you have, as well as brainstorm ways to improve your budget moving forward.

Communication is key when it comes to managing your finances. And the more you align your financial goals and work together to achieve them, the more likely you will be to stick to your budget.

In fact, you might even find that budgeting helps relieve a lot of the financial tension.

7) Enjoy Your Money

This probably sounds like a funny budgeting habit, but it’s actually one of the most important.

Too often, people get so caught up in the numbers and the details that they forget to enjoy their money.

Remember, your goal in creating a budget is not to make your life more difficult, it’s to help you live guilt- and worry-free within your self-determined boundaries.

And within those boundaries, you should always make a little room for fun.

Do you like to play golf? Include enough money to play a few rounds each month.

Do you love a good trip to Target or TJ Maxx? Make some room in your budget to do a little shopping.

Do you enjoy going out for drinks with your friends after work? Go ahead and work that into your monthly budget.

If you restrict yourself too much, you’re just going to end up resenting your budget and quitting–which isn’t the goal.

Remember, the purpose of your budget is to improve your life, not to turn you into a miserable hermit.

That’s why one of the best budgeting habits you can adopt is to make some room in your budget for fun and enjoyment.

8) Log Your Expenses Daily

If you really want to get a handle on your finances, one of the best budgeting habits you can develop is to log your expenses each and every day.

I know this probably sounds like a lot of work, but it doesn’t have to be.

Truthfully, the more diligent you are about logging your expenses into your budget, the less time it will take you. In fact, if you’re consistent, this process shouldn’t take more than a couple of minutes each day.

Plus, when you check in with your budget on a daily basis, it will keep your financial goals front-of-mind, making it much easier to stay on track.

Budgeting Habits: Summary

If you want to be successful with your budget, you need to develop some good budgeting habits.

And the best news is, they don’t have to be complicated or time-consuming.

By following the eight simple budgeting habits outlined above, you can take control of your finances, accelerate your financial goals, and improve your overall quality of life.

So, what are you waiting for? Get started today!

Zach Buchenau

About The Author:

Zach Buchenau is a self-proclaimed personal finance nerd. When he isn't writing about budgeting, getting out of debt, making extra money, and living a frugal life, you can find him building furniture, fly fishing, or developing websites. He is the co-founder of BeTheBudget, and Chipotle's most loyal customer.

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