What are your favorite tips, tricks, and methods for budgeting? We know budgeting isn’t necessarily a “one-size-fits-all” thing, but what methods, programs, etc have you tried that worked for YOU?
Also, what are your strategies for prioritizing budgeting categories in tricky or non-traditional situations?
Tip: Before creating a budget, track your expenses to get a baseline amount for each category. That way you’ll know how realistic your budget is.
I am very careful to keep my budget and my spending goals mentally separate. My goals absolutely can and do influence my budget, but fundamentally, my budget is about making sure that I have the money for things that I know I will, in fact, spend money on, whether or not that meets some stated goal. It’s all about allocation. I don’t believe in making some super sparse aspirational budget that I’ll never stick to; I want to make a budget that actually works for my life.
Like Crow suggests, I track spending (and have for years). My budget is something like 90% based on past spending. I know I’m not going to change those habits very much, for the most part, and I’m certainly not going to change them super quickly!
The other 10% is where my goals/forecasting come in. Sometimes I look at my spending and think, hmm, that’s not what I want that to be – too much on books and too little on charity are two things that have popped up in my spending and budgeting review in the past few years. So, in those cases, I changed my budgets accordingly. It worked, but not because I changed numbers in the spreadsheet – it worked because I was motivated and made a relatively small, reasonable set of changes that weren’t super burdensome (look at the library first for books; challenge myself to read down my collection; set up a few more recurring donations). I changed my budget because I knew I was committed to changing my spending, and so the new allocation made sense!
In contrast to that, I have made only very small changes to my restaurant budget – I’d like to spend less out, but it turns out that I REALLY suck at that. Making a super tiny restaurant budget would just be silly, because I wouldn’t stick to it, and what’s the point of a budget I can’t stick to? It doesn’t allow me to actually allocate my money in a helpful way at all.