11 Simple Budgeting Rules That Work

The idea of establishing and following a budget may sound great, but actually doing it can be downright hard. Luckily, you don’t have to hire an accountant or completely overhaul your lifestyle to rein in your spending. Here are a few tips to get you started.

1. FOCUS ON YOUR DEBT FIRST.

It’s hard to save money if you’re in the red. Before you start budgeting, come up with a plan to resolve outstanding bills, credit card payments, and any other lingering debts you might have. The sooner you get out of the negative, the more time you’ll have to build the positive.

2. TRACK YOUR SPENDING FOR ONE WEEK. 

There’s no need to log your expenses for weeks and months at a time. Keep a detailed record of your spending for one week, and key patterns should emerge. Perhaps you’re buying too much clothing, or eating out too often. Recognizing bad spending habits early on is important, and a lot more practical than counting every penny over the long run.   

3. TECHNOLOGY IS AVAILABLE TO HELP— USE IT.

If you’re not into the idea of spreadsheets or writing down expenses by hand, budgeting apps can help. They’ll link into your credit card accounts, track your spending over time, and provide an easy-to-follow breakdown of what you’re buying and where. They can also offer savings advice based on your results.

4. TARGET YOUR THREE WORST OFFENDERS. 

Rather than count every dime, group your spending into categories and focus on the three most problematic ones. If you see that nearly half of your monthly expenses are going towards booze, shoes, and music downloads, for instance, address those first. Doing this is practical, efficient, and targets the specific behaviors that stand in the way of good budgeting.

5. SET INCREMENTAL GOALS. 

Trying to address all of your bad habits at once will only lead to disappointment. Establish specific, attainable monthly goals that build upon one another. In the first month, for instance, set a goal of tracking expenses and identifying problem areas. In the second month, set a modest savings goal. Know that setbacks will happen—but don’t let them derail your progress over the long run.

6. SHOP WITH A LIST. 

Even if you’re only going to the supermarket for milk and eggs, make a list. Doing so will make you conscious of what you need and intend to buy. It’ll also shame you when you try to sneak that extra pint of ice cream into your basket. You know better!

7. SAVE FIRST, THEN SPEND. 

Conventional thinking states that you should spend first, then save what’s left over (assuming you’ve spent less than what you’ve earned over a given period of time). But why not turn that around? Socking away money at the beginning of the month, for instance, bypasses the temptation to spend those extra funds.

8. AUTOMATE YOUR SAVINGS. 

Most banks will let you set automatic monthly transfers between your accounts and employers usually offer 401(k) and other diverted savings plans. Using these options will take the question of whether to save out of your hands, and will also hold you to a certain amount of savings each month. You may need to adjust the amounts over time, depending on your financial situation, but you should resist doing away with the transfers altogether.

9. SET UP SEPARATE ACCOUNTS. 

Financial experts recommend dividing your earnings up into a few categories, or “buckets.” A popular breakdown is the 50-20-30 plan, which allots 50 percent for necessities, 20 percent for long-term savings, and 30 percent for lifestyle expenditures. While it’s probably not wise to use actual buckets, you can divide your earnings amongst a few bank accounts. You can even automate the process to make sure the right amounts are going to the right places.

10. CANCEL CATALOGUES AND NEWSLETTERS.

Temptations to spend are everywhere, and some of the most effective ones are delivered to your inbox and mailbox every day. You can sign up for services that will put a stop to unwanted catalogs, and most merchants that let you sign up for mailers and newsletters make it fairly simple to unsubscribe. It might be overkill to do away with all your subscriptions, but surely you don’t need seventeen daily fashion newsletters.

11. DON’T GO IT ALONE.

Ultimately, you’re responsible for developing your own budget and sticking to it. But friends and family can help you along with encouragement and tough love. So share your savings goals with at least one other person. Who knows, they might even offer you some good advice.