How to Create a Budget You Can Actually Stick To

November 18, 2016 • Rehack Team


We tend to dread the word budget. We want to reach our financial goals without the work of creating one, or we set unrealistic expectations and end up giving up on the budget anyway. However, it’s possible to learn how to create a budget that you’ll stick with and will be successful. Here’s how!

Track Your Spending

Figure out where your money is really going each month. You might think you don’t spend that much on Starbucks every week, but you could be surprised once you actually write it out.

Start with your fixed expenses. These are the things that don’t vary in amount, like rent, car payments or student loans.

After fixed expenses come your variable expenses. Your Starbucks orders are included here, as well as grocery shopping and going out to eat. See how much you can cut back on these things. You can save on Starbucks by making coffee at home, and going out to eat tends to be a lot more expensive than cooking.

Set Realistic Goals

When you’re thinking about how to create a budget, it’s important to be realistic about what results you want to see. If your goal is to save $20,000 for your dream wedding, don’t expect that to happen overnight. Compare your spending to your income and see what a realistic time frame would be to accomplish your goals.

Try setting goals that are monthly or weekly instead of trying to accomplish your goal by a certain time. Smaller goals are easier to hit and keep you on track. It’s too easy to spend money if you’re just planning to have that money saved in two years, and before you know it, those two years are gone.

Lock Yourself In

Automate your systems to guarantee you aren’t going to stray from your budget. That’s the best way to create a budget that sticks. Set it up so a certain amount gets transferred to your savings automatically every paycheck. If the money goes to savings before you even see it, you can’t be tempted to spend it.

Restrict yourself to only paying with cash. It makes it a lot easier to see exactly what you’re spending on variable expenses. Withdraw a certain amount from the ATM at the beginning of the month for things like groceries, clothes and things that aren’t necessities.

Make sure you’re comparing your spending to your income so you see how much more you might need to save before reaching your savings goals.

Put Your Money Where You Can’t Get It

Don’t keep your savings in the same institution you normally bank at. Having that money where you can easily access it is temptation you don’t need. That money is specifically for whatever your end goal is, or if an extreme emergency were to come up. There should be no way you can access it with an ATM card.

Evaluate and Make Adjustments

Your budget might not be as successful as you want it to be right away. Keep an eye on it month to month and see where you still need to eliminate spending, or where you don’t have enough money. Emergencies can happen, and adjustments will be needed for Christmas shopping or other seasonal expenses.

Keep tweaking your budget on a monthly basis until it’s perfect for you. Rarely are things ever perfect on the first try. You just have to find a rhythm that works for you.

Now that you know how to create a budget, you can see it doesn’t have to be tedious or difficult. Stay focused on your goal, set reasonable milestones and make sure you’re keeping an eye on things. You’ll see your savings add up in no time.