How to Set Yourself Up to Budget Successfully

Raise your hand if you’ve tried to budget time and again. Maybe it’s your New Year’s resolution. Or perhaps you’re tired of living paycheck-to-paycheck every month. I’ve been there.

Most of us aren’t taught how to budget successfully when we’re growing up. There’s so many taboos around money that knowing what to do with our money can seem impossible.

See, the thing is that no one tells us how to set ourselves up for success. We’re told to create a budget and stick to it but…how do you make sure you’re actually successful? Below I’m sharing the tips and tricks that have worked for me!

1. Don’t Underestimate the Importance of Expense Tracking

Before you start setting up and following your budget, you really need to pause and track your expenses for a month. Start by going back and referencing old bank/credit card statements to get an idea of your spending.

But don’t stop there! It’s important that you actually set aside a 30-day period (doesn’t have to be at the beginning of the month!) and start tracking every dollar you spend. Buy coffee with cash? Track it. Venmo your friend for your half of a Lyft? Track it.

It’s SO important that you do this honestly, accurately, and without looming budget categories that you’re trying to stick to (at first). You NEED to understand where your money is going every month, and how much you’re spending on what.

Think about it: if you don’t know how much you’re spending, can you assign an amount to your budget for it? Sure, you can put down what you think you should spend, but this isn’t realistic.

And that’s the thing with budgeting – you’re gonna set yourself up for failure if you’re not realistic with your spending and budgeting. We’re trying to budget successfully so we definitely want to avoid this.

Plus, there are so many ways to track your finances, there’s no excuse not to start. You can use apps to track your spending, or you can use pen and paper.

2. Automate, Automate, Automate

How many times have you found yourself with some extra cash in your checking account? Maybe it’s that extra paycheck on those long months, or a Christmas bonus, or a raise. What do you do with that money? I know that when I have money sitting in my checking account I feel like it’s there for me to spend. So of course that’s what I do! I spend it all.

Automating your money totally saves the day. Do you need to save 10% of every check to reach your emergency fund goal? Automate it so it comes out of your checking account as soon as you get paid. Have recurring bills that you need to pay on a set date? Automate it so it comes straight out of your account. Technology is your friend here.

You don’t want to put yourself in the position where you have to think every month about how much money you can save. The less you have to think about how much you’re saving, and what you could be spending it on instead, the better.

3. Leave Room for Fun

One of the biggest mistakes I’ve made when budgeting is not budgeting for a “miscellaneous” or “fun” category. Thinking you’re only going to spend money on the bare essentials is an admirable goal to have, but probably not a realistic one.

And that’s the thing, you can’t be unrealistic with your budget, not if you want to budget successfully. If eating out with your friends brings you joy, budget that in. If you know you like to buy pretty stationery (ok that can’t just be me, right?) set aside a couple of bucks each month for this.

This isn’t to say that you should allocate a ton of money to these “fun” categories. Set a small amount that you’re comfortable with. Setting some money aside to spend guilt-free on the things that bring you joys so important for your budget and for your mental health.

You’ll be so much more likely to stick to your budgeting if you allow yourself to buy the things you love. It’s not fun to try to deprive yourself of everything.

Plus, if you don’t spend all of the money in the “fun” fund, you can always deposit the rest into your savings. You could also roll it over to the following month and really treat yourself. Score! Just remember: everything in moderation!

4. Don’t Forget to Budget for Annual Expenses

It’s easy to forget to budget for expenses that only come around once or twice a year. After all, if something’s out of sight it’s usually out of mind as well!

But these annual expenses can be major budget killers, and leave you feeling like you have zero control over your money. So when you’re building your budget, make sure you list ALL of your expenses.

For annual or irregular expenses, the best way to budget for them is to spread out the cost over 12 months, and create a sinking fund that you deposit into each month. Once the expense comes up, you simply pay for it out of the fund without your budget having to take a hit, and that’s key to budget successfully!

Ready to Start Budgeting?

Budgeting can be scary, but it doesn’t have to be. With the right smart money habits, you can start to save money and be in control of your finances. And what’s better than that?

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