5 tips for creating a budget to support your financial goals

5 tips for creating a budget to support your financial goals

WRITE IT DOWN

Writing down all of your expenses is key, said Elena Pelayo, educator at How Money Works, a financial literacy organization. She suggests recording every penny that you spend rather than trying to approximate, which can lead to errors.

BUDGET FORMAT

Writing down your after-tax salary and then adding your expenses in a notebook or a blank spreadsheet might be enough to make a plan. But if you need help visualizing what’s coming in and going out, there are resources available. “There are lots of online templates that’ll help you look at spending categories and expense categories for personal finance. And they’re really helpful,” Pelayo said.

MAKE A REALISTIC PLAN

If 50/30/20 isn’t realistic for you, there are still ways to save and tackle debt. Start setting aside small quantities of money every month or set small goals, such as choosing a restaurant where you won’t spend more than $40, McCreary said. “Small steps lead to progress,” she said. “It’s really about progress, not perfection.” McCreary recommends starting with one goal each week, whether that’s saving a certain amount or reducing the amount you spend on non-necessities.

MAKE IT A HABIT

To achieve your financial goals through a budget, you have to change your mindset, Pelayo said. “You have to look deep inside yourself and say, am I willing to change my habits?” she said. Once you are mentally ready, you can start setting goals.

INVOLVE YOUR FAMILY OR FRIENDS

As with any lifestyle change, having people around you to support your decisions and encourage healthy habits is crucial, McCreary said. That could include talking with your significant other about your finances, telling your friends that you will start budgeting, or explaining to your children how the family is now spending money.