If you’re struggling to get started in budgeting, or just can’t seem to achieve good results, these budgeting tips for beginners are for you.
A budget is the best tool to help you reach your financial goals.
But how do you create a budget?
And how can you be sure to stick to it?
If no one’s ever taught you the basics of budgeting, the whole process can get pretty overwhelming.
Thankfully, budgeting is a skill that virtually anyone can learn. And with the help of these seven tips, you’ll be a pro-budgeter in no time.
Let’s dive in!
1. Use The Zero-Based Budgeting Method
One of the most important budgeting tips for beginners is to use a zero-based budget.
This is a method of budgeting that involves planning your monthly expenses down to the last dollar.
And while that might seem a little overwhelming, creating a zero-based budget is easy!
Your first order of business is to figure out how much money you’re working with every month. And be sure to include all of your sources of income in this step.
If your income is irregular, we recommend basing your budget on your lowest earning month from the previous six months—just to be safe.
After you’ve calculated your total income, the next step is to plan your expenses.
During this step, you’ll create a plan to give, save, invest, and spend every single dollar you earn in that month.
In other words, your total income minus your total expenses should equal zero.
To create your zero-based budget, you should establish budget categories that include your variable and fixed expenses.
Here are a few examples of spending categories you might choose to incorporate in your budget:
- Rent or mortgage payment
- Auto expenses
After you’ve allocated every dollar of your income across your budget categories, the final step is to stick to your zero-based budget.
Be sure to regularly track and monitor your spending to avoid surprises at the end of the month.
2. Save Before You Spend (i.e. “Pay Yourself First”)
One of the easiest mistakes you can make when budgeting is to spend before you put money into savings.
Seriously, this is a mistake that will prevent you from making meaningful progress toward your financial goals, so you shouldn’t take it lightly!
No matter how much income you earn every month, you should always make saving your first priority.
In other words, pay yourself first.
This will make you much more likely to meet your monthly savings goals, and set you on a path to building wealth.
To hold yourself accountable for saving before you spend, you can schedule recurring transfers into your savings account for the same day you receive your paycheck.
This way, you will never be tempted to spend the money you’ve designated as savings. Instead, it will already be out of sight and out of mind in your savings account.
Over time, the money you save each month will start to add up.
When you make saving a percentage of your income non-negotiable, you’ll be surprised by how quickly you’re able to start reaching your financial goals.
Out of all the budgeting tips for beginners, I truly believe this is the one that will make the most difference in your financial health.
Want to get better at budgeting and saving money? Check out some of our other helpful guides:
- Zero-Based Budgeting: What Is It? And How To Do It?
- 7 Budgeting Tips For Singles [Save Money And Enjoy Life!]
- Budgeting For Couples: 10 Tips To Ease The Tension!
- Living On A College Budget: 21 Tips That Won’t Wreck Your Fun!
- 25 Tips For Living On A Food Budget
- The #1 Key To A Successful Budget
- 50 Budgeting Tips (For Every Stage Of Life)
- Why Is Budgeting Important? 10 Key Benefits
3. Allocate Money For Fun/Enjoyment
One of the most trying aspects of budgeting is sticking to the plan you create for your money each month.
We get it – life happens, and there are always shiny temptations begging you to spend your hard-earned money on them.
Therefore, it’s a great idea to make space in your budget for fun.
By giving yourself room to spend money on a few extra things, you’ll be more likely to stick to your budget long-term.
However, this doesn’t mean you should spend a massive portion of your budget on candy and music festivals.
We recommend allocating 5-15% of your take-home pay for things you enjoy.
For example, if one of your favorite things to do every month is to go out to a fancy dinner, make room in your budget for that. Or, if playing a couple rounds of golf brings you joy, include that in your budget.
The bottom line is, sticking to a financial plan is a lot easier if you’re not miserable while you’re doing it.
By allocating some of your income for fun activities, you’ll prove to yourself that you can still live a fulfilling life on a budget.
As a result, you’ll be much more likely to stick with it.
4. Overestimate Your Food Budget
Another helpful budgeting tip for beginners is to overestimate how much you will spend on food.
Food is one of the most common budgeting areas where people overspend.
It can be tough to estimate the cost of groceries since food prices tend to fluctuate.
And, since you probably don’t cook the same meals every week, your grocery list is constantly changing. This makes it hard to keep your food spending consistent week after week.
Also, you may end up dining out at restaurants more often than you originally anticipated.
You should plan ahead for these kinds of last-minute lunch meetings or spontaneous social outings.
Do yourself a favor and give yourself a generous food budget.
Underestimating how much you’ll spend on food will only set you up for failure. And if you have a little extra “food money” leftover at the end of the month, you can always put it toward your savings.
Just to be clear, this isn’t about being overindulgent and buying the most expensive groceries or menu items.
Instead, it’s about giving yourself some wiggle room in a budget category that tends to be pretty volatile.
5. Reconcile Your Budget Daily
To ensure you stick to your budget every month, review and reconcile your budget at least once a day.
This way, you won’t fall behind, you’ll be able to ensure you’re sticking to your plan, and you’ll be able to make minor adjustments whenever necessary.
Seriously, this should only take two to three minutes, and it will help you stay on track throughout the month. You can do this on a spreadsheet or in an app – wherever you created your budget.
While it might sound tedious if you’re not already in the habit of doing this, just a few minutes each day can save you from a nasty surprise at the end of the month.
By looking at your budget every day, you’ll constantly know where you stand with your money. You’ll always know how much money you have left to spend in each of your budget categories before you hit the limit.
6. Budget With Your Spouse
If you’re married, budgeting is only effective if you and your spouse are on the same page.
In other words, budgeting doesn’t work if you’re the only one looking at the numbers and making budgeting decisions.
That’s why one of the most important budgeting tips for beginners is to tag-team your budget with your spouse. By doing so, you’ll both be working toward the same financial goals.
If it helps, you can think of your household finances like a business that you and your spouse are running together. After all, business partners would never leave the fate of their finances to chance! And neither should you.
To start working together on your finances, set up regular budget check-ins with your spouse.
Also, we highly recommend creating your monthly budget together, and discussing what went well during the previous month and how you can both improve.
Since many marital conflicts occur because of finances, it’s important to have clear and consistent communication with your spouse about money.
Sure, it may be difficult at first, especially if you are on different pages about saving and spending. But if you can come together to establish a few shared financial priorities, you’ll start to feel like you’re on the same team.
Having a budgeting partner isn’t always easy, but it has its benefits. Instead of working on your financial goals alone, you and your spouse can provide encouragement and hold each other accountable.
7. Set Inspiring Financial Goals
Budgeting can feel pretty pointless if you’re not working toward an inspiring financial goal (or a few).
Let’s be honest, budgeting for the sake of saving more money is pretty boring. And one thing I know from experience is that boring goals won’t inspire you to make the necessary sacrifices in order to achieve them.
Rather, if you set some compelling personal financial goals you’ll be much more likely to stick to your budget throughout the month. Here are a few examples of financial goals you might adopt:
- Retiring before 50
- Getting rid of your student loan debt
- Paying off your credit card debt
- Paying off your mortgage
- Saving for a down payment on a house
- Saving for a car
- Saving for retirement
- Saving for your kids’ college funds
- Funding a vacation you’ve been dreaming about taking
- Saving enough money to travel the world
Whatever goal you choose, it should be something specific and important to you.
Think of it this way: your financial goals should be more powerful than your desire to make impulse purchases. That way, whenever you’re tempted to spend money on something outside of your budget, your goal will motivate you to stay on track.
Bonus Tip: Use The Debit-Card-Only Rule
If you want to get serious about your finances, utilize our final bonus tip and stop using credit cards altogether.
Credit cards have incredibly high interest rates and encourage you to spend money that you don’t have.
If you have a history of swiping your credit card without a second thought, switch to a debit card.
When you only spend money with your debit card, you won’t be flirting with interest payments, and you won’t risk getting into credit card debt.
Also, limiting your spending to a debit card will make budgeting easier because you’ll only have to log in to one account to track all your spending activity.
On the other hand, when you use credit cards, your purchases are spread out across different accounts, and many transactions take multiple days to post. So, when it’s time to reconcile your budget, you have to track down every expense, and it’s easy for transactions to slip through the cracks.
To make the process simpler, stick to a single debit card. This way, your budgeting will be accurate and take less time.
In turn, you’ll be much more likely to stick with your budget.
So, there you have it – our top budgeting tips for beginners.
As you can tell, budgeting doesn’t have to be complicated or overwhelming. In fact, these tips can make planning and tracking where you spend your money incredibly simple.
If you’re worried about budgeting putting too much constraint on your life, know this: a budget actually creates more financial freedom, not less. Instead of constantly worrying about whether you have enough money to cover your bills or pay for the things you want, you’ll know exactly how much you can spend.
Within the boundaries of your budget, you’ll have peace of mind knowing you can pay for all your expenses and priorities.
So, give budgeting a try. I truly believe it’s the best thing you can do for your finances, and it will change your life for the better.
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