Having trouble sticking to a budget? You’re not alone. Many people have tried budgeting over and over, but keep ending up stuck, tired of feeling deprived, and believing they’re just bad with money.
But it doesn’t have to be that way!
Your budget doesn’t have to be a restrictive part of your life that you’re always fighting against. Instead, your budget should be an empowering, fun part of your money plan that helps to align your spending with what matters most to you. That helps you reach your biggest goals and live the life you want.
Here’s how you create a budget that actually works long-term.
7 Tips to Make Your Budget Work Long-Term
1 – Give Every Dollar a Job
Human beings are terrible estimators. So when you only allocate for your major bills and expect the $400 left over to be “plenty” for everything else, guess what happens? Every time an expense comes up that month you think, “It’s fine, I have $400!”
And suddenly, you’ve spent $700.
Instead of leaving pools of unallocated money in your budget, give every dollar a job. This is rule #1 with my favorite budgeting app, YNAB, that I’ve been using since college. What it means is for every available dollar you have to spend, consciously decide what you’re going to do with it.
If you have $400 left in your budget after covering major expenses, decide exactly how you’ll use it. Put $100 in debt repayment, $50 in dining out, $60 in car maintenance because you need an oil change, and so on until you have no money left to budget. This way, when you need to decide if you can order takeout, you can look at your budget and know for sure if the money is there.
2 – Plan for Irregular Expenses Early
Not every expense happens every month. Often, big ones – like property taxes, auto insurance, home maintenance and Christmas gifts – only come up every few months.
Instead of having to scramble to find extra cash when those bills arrive, start planning early.
Consider what expenses come up in your life that don’t happen monthly. Establish categories in your budget for those items. Then, divide the cost by the number of months until the bill will come due. Finally, set aside that amount each month in your budget. When the bill comes due, there’s no stress! The money is there, ready to cover the cost.
These categories are called ‘sinking funds’. My husband and I have many sinking funds in our YNAB budget including vacation, annual subscriptions, property taxes, insurance, new laptops, and more. They keep our budget more consistent and help us look forward.
3 – Don’t Make Your Budget Too Restrictive
When you’re just starting a new budget and motivation is high, it’s easy to think you can slash everything to the bone. Cutting your grocery bill in half, cancelling all subscriptions, and never stopping at Starbucks again.
Sure, if you could stick to that, you’d pay off debt like a champ. But that’s a big “if”. And it doesn’t seem like your life would be much fun.
Whenever you create a budget, leave room for the things that bring you the most joy. Create a “spending money” account for you and your spouse, even if you can only afford $10 a month each at the beginning.
When you make your budget too restrictive, you’re more likely to go on late-night Amazon spending binges. Not only is that not helpful for your wallet, but you’re not likely to spend money on things that align with your values and priorities in those moments. So, give yourself the space to enjoy today while you save for the future.
4 – Check In on Your Budget Regularly
For your budget to work long-term, it needs to become part of your routine. Many new budgeters create their spreadsheet, come back in two weeks, and are frustrated when they’ve overspent in some categories and still have half of the month left.
To make sure you stay on track, you need to build the habit of checking your budget before you spend and keeping it updated so you can trust what the budget is showing you.
For new budgeters, it can be very helpful to start a 5 minute morning routine where you check in on your budget and categorize any expenses from the day before. That way, you go into your day knowing what you have available. Over time, you may be able to move to every few days or once a week. But early on you want a pulse on exactly how much you’re spending.
I’ve kept a budget since I got my first internship in college. All in YNAB. Each Friday evening, my husband and I have a family meeting where we talk about the budget and our plans for the next week. It took time to make that conversation automatic, but now that it’s a habit, we both know when we’ve gone off-track or when things need to shift.
These type of regular meetings may seem restrictive or overwhelming. But they put you in control of your money. By checking in regularly, you’ll know exactly how much you have and will confidently be able to make decisions about your spending.
5 – Understand Your Spending Triggers
We all have things that make us spend money, almost without thinking about it.
A long, tiring day. Driving by the coffee shop on your way to work. Feeling underappreciated or lonely. Going into the grocery store hungry.
When you first created your budget with all that purpose and motivation, it felt like willpower would be enough to help you avoid all the things you “used to” spend money on. But we all have busy lives and a limited amount of willpower. Especially when we’re tired, distracted, overwhelmed, or hungry.
Whatever your spending triggers are – environmental or emotional – take the time to look at your spending and discover those triggers. Then, create a way to handle them.
I believe their are three ways to handle spending triggers:
1 – Get clear on what emotional holes you’re trying to fill with spending. Come up with free ways to cultivate those feelings.
2 – Change your routine to avoid those triggers. (Like only doing online grocery orders or driving a different way to work.)
3 – Plan for those expenses in your budget.
Remember that this is a journey. It’s better for your budget to be realistic than some perfectionist ideal that will continually have you feeling like you’re failing.
6 – Budget for the Things You Forgot
This one sounds a bit funny, doesn’t it? How do you plan for things you forgot?
Simple. Create a “Stuff I Forgot to Budget For” category.
This is a standard category in YNAB and when I first downloaded the program over 10 years ago, I didn’t quite understand it. My perfectionist brain thought I should just be able to think of every possible expense in my budget.
But not all expenses happen every month. And sometimes, things just cost more than you expected.
A “Stuff I Forgot to Budget For” category lets you capture the small, esoteric things you don’t know what to do with. And it gives you some money to pull from if you overspend a bit in a category one month.
Start with $20 or $40 in this category, just enough to cover something small. If you’re consistently using more than that, see if you need to adjust other categories or add new ones.
“Stuff I Forgot” has become one of my favorite categories. It’s a pressure valve that let’s you adjust and move on with your budget habit quickly and easily.
7 – Make Your Budget a Living Thing
The first time you create your budget, the numbers aren’t carved in stone. You won’t have all the right categories or all the right spending limits the first time around.
In fact, it’s almost guaranteed that you won’t.
There is no such thing as a “normal” month and that means we need to learn to roll with the punches. (YNAB Rule #3, by the way.)
To make your budget a living thing, keep it flexible. If you find you need to spend more money in a category this month, find a category (or two) that has a little extra, move the cash to where you need it, and carry on.
If your budget is moving you closer to your goals, however slowly, you’re winning.
Sometimes it feels impossible – an emergency or unexpected event throws you off, you go over a budget category again, and you start to believe you just can’t budget.
But all you can do is take those moments as a chance to reflect.
A budget, spending plan, happiness allocation – whatever you want to call it – is a way of determining your values and priorities around money. It isn’t set in stone, meant to be chiseled out and never changed.
Keep learning, shift where you need to, but don’t give up.
Create a Budgeting Practice
Budgeting, like any other skill, takes practice to become a habit. It’s not something you do once and never alter again. Instead, you start with your best guess, understand your goals, sign-up for a budgeting app like YNAB (click here for a 34 day free trial) and check-in regularly. Some categories you’ll be able to cut back and some you’ll have to add to. That’s okay. Just commit to continuing to learn. Soon, your budget could be one of your favorite things – a tool that reduces your stress and let’s you spend on the things that matter to you guilt free.
You’ve got this!
How do you make your budget work for your family? Drop your favorite tricks in the comments!