Top 7 Tips for Creating a Budget

The following is a post from staff writer Crystal from Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.

As if the name of my blog doesn’t give it away, I love budgeting. I think assigning our hard earned dollars to specific categories keeps me from going nuts thinking about it all of the time. I love compartmentalization and my budget is proof.

That said, here are my Top 7 Tips for creating a Successful Budget:

1) Give yourself time. After creating your initial list of income and expenses, monitor your spending for at least a few more weeks to catch the things you forgot. Little things really do add up and if they are not taken into account, your budget may not hold up under the pressure.

2) Prioritize your list. Once you do have a complete list of expenses, put them in your own order of importance. You may find that you were not spending in line with your values. When I created our budget 6 years ago, I was surprised at how little we were saving for our huge goal of early retirement and how much we were spending on things like cheeseburgers…

3) Don’t beat yourself up. If you get too hard on yourself for past mistakes, you will fail at creating a new working system. Accept that mistakes happen and try to work up some excitement for creating a new financial future for yourself.

4) Give yourself some fun money. I have personally seen 3 different people fail within the first few months of following a budget simply since they didn’t give themselves any money to play with. We are human. Completely depriving ourselves can lead to huge splurges in the future that may derail a budget altogether. Do not set yourself up to fail.

5) Toss your sense of entitlement. My husband and I do not “deserve” a new car or a huge wardrobe. As long as you feel entitled to luxuries, you cannot control your spending on them. Accept that you want things, budget in small amounts every month to splurge, and move on. Budgets are not just for the necessities in life. The splurges need to be budgeted for too.

6) Remember the “Miscellaneous”. Every budget needs a small amount dedicated to crap that happens. Tires pop. Kids get sick. Dogs hurt themselves. Stuff just happens. If you don’t have money in your budget set aside for the “darn its”, you’ll find another category taking the hit.

7) Automate as much as possible. I love automating my savings so I don’t even see the money before we squirrel it away. It’s much harder to spend something you never really felt like you had. Why do you think the government takes their cut out before you even see your paycheck? If you automatically fund a Roth IRA or whatever, you’ll be truly surprised how much you can save up with just a little time.

These tips help keep me on track. Good luck!

Can you think of any other great budgeting tips?

5 Responses to Top 7 Tips for Creating a Budget

  1. Budgeting can be tricky, when you forecast your expenses for utilities, gas, and other things that change. When you forecast those expenses, expect they will increase and budget a realistic amount.

  2. I think the hardest part is being patient. Everyone wants to get back on track FAST but it doesn’t work that way.

  3. Great pointers. Learning how to expect the unexpectant (coincides with point #6) was tough for me at first. I know have my “randoms” category on my budget for these items.
    Thanks for the awesome tips!!!