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6 Beginner Tips for Creating a Personal Budget That Works


Anyone serious about solving their financial woes, saving more each month, or simply gaining a better understanding of where their money is going, need to get on with creating a personal budget.

According to CNBC, 81% of Millennials save, and many attribute their saving habits to having a personal budget in place. And at the same time, 57% of Americans — in a survey of 8,000 — claim that they have less than $1,000 in savings, according to GOBankingRates.

Wherever you find yourself on the spectrum of personal finances, whether you have no money or are building wealth successfully, it’s clear that developing a workable personal budget is the only way to start saving for the future — and to protect your funds for the long-term. By establishing one, you can do yourself a world of good. It doesn’t take a lot of time to initiate a budget, but there is a correct way to do it. Check out these six beginner tips.

Strategies for Creating a Personal Budget

  1. Choose the Right Platform

There are three basic platforms for creating a personal budget. You can go online with a free service like BudgetTracker or BudgetPulse, you can use Microsoft Excel, or you can simply write one out on a piece of paper. It doesn’t ultimately matter which format you choose, just as long as it feels comfortable and helps you stick to it.

  1. Make It Comprehensive

If you fork over a monthly fee for a storage unit, pay a babysitter, or hire someone to cut your grass every week, be sure to include those expenses in your budget. Every penny you spend should be noted. And that means annual and semiannual bills, too, such as car insurance premiums and property taxes.

  1. Adjust Your Expenses

If your cable bill goes up by $10, reflect that in your budget. If you start couponing to save on groceries and you’re able to reduce your food expenses by $75 each month, for example, make that adjustment as well. Also, if your credit card bill goes up one month, but you earn cash back rewards from those purchases, make note of those changes too. No budget is going to work unless it’s entirely accurate and up-to-date.

  1. Use It

Don’t just sign up for an account with Mint to create a budget, only to never look at it again. Expenses go up and down over time, and to make the smartest financial decisions, you need to know where those changes are occurring. For example, if you start paying $40 more per month because of rising gas prices, you may need to cut your entertainment spending in half. You wouldn’t know that, of course, unless you had your budget to guide you.

  1. Make It Realistic

You may “want” to spend only $100 per month on entertainment, but if you usually spend closer to $400, you’re not doing yourself any favors by writing the smaller number into your budget. Always be honest and realistic with yourself. Once you set up an accurate budget, you’re going to have a much better idea where you need to cut back.

  1. Address Shortcomings Prudently

If you host a dinner party and end up overspending on food by $200 as a result, don’t panic. This is where you can indeed realize the power of budgeting. Whenever these overages occur, simply identify other sectors of your budget where you can cut back to keep yourself on track with your overall spending. Once you get in the habit of making such adjustments, you’ll start to have a better idea of which spending areas are most important to you. Then, you’ll be able to cut back in areas that are less important and spend more on things that you enjoy the most.

Final Thoughts

Once your budget is in place, get to work reducing your bills. Don’t just accept that cable TV is always going to cost at least $100 per month, or that your electricity bill is always going to be in the $150 range. Check the Internet for ways to reduce every single expense and get to work putting your research into action. As you make headway, be sure to adjust your expenses, calculate your average monthly surplus, and earmark those funds for wherever your financial picture needs the most help.

What lessons have you learned in the course of creating your first personal budget?

Author bio: Tom Clarins is an asset manager and private personal finance coach. He has a wealth of experience helping both individuals and corporations reach their maximum financial wellbeing.

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