Tips for Starting and Sticking to a Budget

Written by Christina Miller
Edited by Carly Simon-Gersuk

The idea of starting a budget and sticking to it can seem overwhelming and daunting. As humans, we like habits and breaking them can be uncomfortable, especially when it means changing our way of life. In fact, a Gallup study showed that only 32 percent of Americans have a budget each month to track income and expenditures, and only 30 percent have a long-term investment and savings plan. However difficult it may be to start and stick to, a budget can be an essential factor in reaching long-term and short-term financial goals. Here are some of the best tips for starting and sticking to a budget.

1.Spend within your means

Many Americans are saddled with credit card debt (average household credit card debt is over $8,000). While there may be some items or situations that necessitate going into a bit of debt, normal day-to-day spending is not one of them. Cutting back on items that are not necessities may be required in order to stick to a budget.

2.Start with your net income and work backwards

First, start by separating your expenses into two categories: fixed and variable. Fixed expenses are those that are the same each month, such as mortgage, rent, health club memberships, etc. Variable expenses change monthly, such as gas, electricity, food, etc. From here, divide your spending into necessities, savings and luxuries. Look at your net income to determine what amounts you can comfortably spend in each category. Prior to setting a budget, it can be helpful to record everything you spend, in order to get a good estimate of your expenditures. From here, analyze places you can cut back, and incorporate into your budget.

3.Know what items are necessities and which are luxuries

Items like rent, mortgage, electricity and groceries are necessities. A daily latte, the latest iPhone and even cable are not. Necessities and savings should always take precedence, and what is left over can be used for luxuries.

4.Set your goals

To successfully budget, it is important to determine your financial goals for both the short term and the long term. Short term goals might be paying off a credit card or saving for a television. A long term goal might take years to reach and an example would be saving for a house.

5.Track your spending

Most people don’t even know how much they really spend every month until they start tracking it. Record your daily spending either with an Excel spreadsheet, or with budgeting software like This can be a sobering task, especially when you see just how much money is going toward things that you have nothing to show for, such as eating out and alcohol. Just the act of writing down all of your expenditures can be a method to help you cut back. Keeping track of your spending will make you more mindful every time you take out your credit card. In addition, reminding yourself of your financial goals will help you avoid impulse spending.

6.Look for ways to cut back

Even small cutbacks will eventually add up to substantial savings. If you’re someone who eats out a lot, try cutting back on eating dinner out once a week and cooking at home. This alone will free up at least an additional $80 a month to spend elsewhere, or even better, put into savings. 

7.Include savings as a line item in your budget

Determine how much you are able to save each month, and include it as a fixed item in your budget. Transfer this amount into savings every month, and only use it for your short-term or long-term savings goals, or in case of an emergency.


Written by Christina Miller
Edited by Carly Simon-Gersuk