Budgeting 101: 4 Steps to Setting a Budget That Works

How many times have you created a budget for yourself only to neglect it days later? You're not alone, setting and sticking to a budget is one of the more difficult aspects of becoming financially secure.

It's not impossible, however. Here are four easy steps to get started:

1. Record and evaluate everything

   A crucial part of budgeting is becoming hyper-aware of every dollar that goes in and out of your accounts. That means creating either a list or spreadsheet—then developing a habit of updating and analyzing this information daily, weekly, monthly and annually. Check with your credit union or bank, they may have online budgeting tools that can help you.
    

2. Track everyday spending

   Start by making grocery lists and setting a specific amount to spend. After a few weeks, you'll figure out how much it takes to feed your household and you won't need to eat out at restaurants nearly as often.

    

   Next, cancel any unnecessary memberships. If you work out at home more than the gym, go ahead and cancel your membership. If you're watching one streaming service more than another, cancel that subscription.
    

3. Utilize technology

   Technology is your friend when it comes to budgeting and saving money—but only if your self-control is strong enough to stay away from Amazon and other frivolous spending websites.

    

   You Need a Budget (YNAB), for example, is the perfect app for people looking to pay off personal debt. For a little more than $80 a year, YNAB helps you create and stick to a budget using your actual annual income. The app allows users to build a budget and follow it in real time. You can even create special budgets for the holiday season. Users also have access to online finance classes. It’s currently browser-based, but offers apps for iOS, Android and Amazon Alexa devices.

    

   Don’t forget about your own financial institution's mobile banking app. A good banking app allows users to securely check balances, view transaction history, transfer funds, locate nearby branches and ATMs and make mobile deposits anytime, anywhere. If you're lucky, it also gives users access to online budgeting tools which let you track long-term savings goals, monitor all of your financial accounts, visualize your spending habits, track your net worth month-to-month and more. Also, budgeting calculators which are linked to your account may provide a clearer picture of how you are managing your budget.
    

4. Set goals you can meet and exceed

   Make your budget successful by determining your “why.” Ask yourself why having money in the bank is important to you. Why is it better to feel financially secure than survive paycheck-to-paycheck?

    

   Most people determine they want to be financially secure so they can pursue passions post-retirement. If that includes you, consider filling out a retirement income calculator to determine how well you’re preparing. Improve your retirement outlook by evaluating your preparedness, changes in the economic climate, inflation, achievable returns and your unique personal situation.

    

   If detailed budgeting is not your thing, the 50/30/20 rule can be a good starting point. This budgeting rule allocates 50% of your after-tax income to needs, 30% to wants and 20% to paying off debt. Most people stop sticking to their budget because it's unrealistic. Set yourself up for success by setting a budget that works with your lifestyle, not against it.