How To Make A Personal Budget (The Right Way): A Beginner’s Guide

top budget categories

Budgeting may not be fun or glamorous, but neither is being thousands of dollars in credit card debt. No matter how much money you make, having and sticking to a budget can help you take control of your life and live the way you want — now and in the future.

Truthfully, though, managing your finances doesn’t have to be a headache. With the right strategy, mindset, and tools, it can be easy to put away money and earmark it for different things. Here is the top do’s and don’ts of budgeting:

Budgeting Do’s

First, Do Calculate Your Necessary Expenses

Your mortgage/rent, medications, gas, insurance, and cell phone bill aren’t costs you can easily cut. Thus, start your budget planning by adding up your total recurring expenses each month and delegating your remaining dollars from there.

Hot tip: If this seems difficult and you find yourself coming up short on cash for some of your bigger bills at the end of each month, consider taking this money out in cash as soon as you get it. Then, keep it tucked away until it’s time to make a payment.

Take Advantage Of Online Budgeting Tools

You don’t have to spend days buried in Excel spreadsheets to set up a realistic budget. In fact, online budgeting tools like the Monorail app simplify the process and can be set up in a matter of minutes. Accessible 24/7 from your smartphone, the Monorail app offers direct bank syncs, visual depictions of your spending and savings habits, and automated fund contributions. 

More importantly, it makes saving as easy as sleeping, all in real-time. Additionally, you’ll have a daily roadmap to navigate your spending and saving decisions, as well as a birds-eye view of your progress toward reaching your financial goals from the palm of your hand.

Budgeting Don’ts

Don’t Rely On Brain Budgets

What are “brain budgets,” you ask? Well, they’re the budgets you work out for yourself but only keep in your head. So, for example, mentally noting that you can spend $100 every month on coffee won’t do you a lot of good if you can’t see the running total as your Starbucks trips accumulate.

Indeed, one of the biggest keys to managing your money and budget well is understanding where your money goes. It also means keeping a visible, real-time total of your spending and savings. In other words, keep track of everything.

If you don’t know at any given moment whether you have $90 or $30 in your budget for a given category, you won’t make budget-safe purchasing decisions. And by not sticking to your budget, you won’t hit your financial goals.

Don’t Cut Out The Things You Love

If your daily coffee run, weekly meal prep service, or monthly dinner dates make you happy and improve your quality of life, don’t cut them out! At least not completely. Money is meant to be spent, and it doesn’t do you any good if you’re not happy.

More importantly, just like any diet, the more restrictive you are, the less sustainable it is. So instead of living like a pauper, let yourself enjoy the things you love — just on a slightly smaller scale. 

In particular, focus on choosing cheaper alternatives and cutting out the mindless spending that can be avoided with a bit of conscientiousness and planning. That way, you can reallocate that money to things that do add value to your life. By spending more intentionally, you’ll start to appreciate those treats even more without feeling deprived.

Budgeting Is Your Path To The Life You Want To Live

You don’t need to make six figures to live a good, financially-secure life. Once you have a handle and gain control of your finances, you gain greater control over your life.

Being intentional and thoughtful with your money doesn’t mean you have to live poor now to live rich later. It means improving your quality of life for your future self and current self. In the end, the financial stress you’ll get to kick to the curb once you have a budget in place is just an added bonus.