Creating a Budget That Works for You

Face it. Setting up a budget and paying attention to what you’re spending can be difficult. It’s time-consuming, places restrictions on you, and is something that always seems to be on tomorrow’s to-do list. It doesn’t need to be that way though.

When a budget is done right, having control of your money is quite empowering and can assist you with reaching your financial goals. You might even take out a small personal loan to consolidate some debt and pay it off easier. A budget can even assist you with planning for the occasional guilt-free splurge. The basic concept of the budget is to spend less than what you make. However, when it comes to creating one that’s both easy to stick to and empowering, it can be a bit tougher.

What Comes in and Goes Out

Before you can create even an envelope budget, you need to determine exactly what you have coming in and what you’re spending. To do this, gather all of your bank statements, check stubs, and anything else you have that will let you know what money you have coming in.

Next, gather everything you have that tells you what you’re spending. This might be bills, gas receipts or receipts for public transportation, grocery receipts, and more.  When you are calculating any debts with loans or credit cards then make sure you are taking into account the interest on these payments that you will need to pay so you can budget better there is plenty online to explain compound interest in borrowing which will give you a better understanding of the interest and calculating it.

Look at How You’re Spending

You shouldn’t be spending more than ½ of your income on the things you need. You shouldn’t be spending more than 1/3 of your income on the things you want. The rest of your income should be saved or invested.  

How does what you spend each month compare with the above guidelines? If you aren’t right on track yet, that’s alright. Most of the time, when people first create a budget, they’re quite shocked to find where the money goes.

Prioritize Spending

Take a bit of time to think about what you’re spending and the areas where you might be spending too much. Anything that’s low on your list of priorities needs to be cut so that you can keep taking care of those high priorities. Setting priorities is all about finding the balance.

Savings Goals

You might come to find that the amounts you save each month might be a bit aggressive, or vice versa. Re-adjust this amount as needed. It might take a few more months to save for your goals, but the key is to, at the very least, be on the path.


Now, all that’s left is to make things as simple as possible. Do that by automating anything from house payments, to bill paying. Have a separate account for each of your goals and each time you get paid, immediately transfer the amounts you want to save into each account as appropriate. If you don’t see the money in your checking account, you won’t miss it.

Once you’ve done all of this, from setting up the budget to the automation of it, you’ll find that you’re well on the way to realizing each of the goals you have regarding saving.

creating a budget that works for you
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