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Personal Budgeting: 3 Powerful Tips to Get Control of Your Money

Personal Budgeting: 3 Powerful Tips to Get Control of Your Money

Do you have a personal budget? This post will teach you 3 powerful personal budgeting hacks to make budgeting finally work for you, the importance of personal budgeting, and the best personal budgeting tools and apps. Plus grab a personal budgeting pdf for free to help you with all your money goals!

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Importance of Personal Budgeting

Why should you bother keeping track of your income, expenses, debt, and savings?

It can sound boring, intimidating, and even stressful.

(Aside: I am an exception to that – I found all this stuff fascinating even as a teenager. A personal finance blogger in the making!)

Related reading: How to Explain Money to a Child: Best Ways Kids Will Actually Understand

Sure it’s easier to bury your head in the sand, but keeping track of your finances and getting on a personal budget will reduce your financial stress, not make it worse.

Think about putting off going to the dentist because you’re afraid you have a cavity. Five years pass, you finally go, and you find out you have several cavities that need to be filled.

Ignoring your money is like that. By having a plan for your money, you will be able to do amazing things with your money like:

  • Pay down debt
  • Pay off debt completely
  • Saving for a trip
  • Save for your first house
  • Save for your dream house
  • Retire early
  • Start a college fund for your child
  • Be able to afford the little luxuries that can add to your life
  • Feel peaceful about your financial situation

Does this sound good?

I hope this helps you see the importance of personal budgeting in your own life.

Let’s keep going because I’m going to show you three powerful personal budgeting tips that will help you stick to a budget, even when you’ve had trouble before.

Also check out this post for the best personal finance apps to manage your money in these crazy times…the first app is my favorite!

Personal Budgeting Basics

If you are brand-new to personal budgeting, here is what you need to know.

(If you already know how to set up a personal budget, you can skip ahead to the next section on powerful budgeting tips that you probably don’t know.)

To put it in super simple terms, to make a budget you add up all the money coming in, and all the money going out, and subtract the two. The goal is obviously to have more incoming money than outgoing.

1. Income and Fixed Expenses

The first step is to write down your income. For some people this is easy – there is one income from one job. If you have more than one job, or if you have a side hustle, include that income as well.

Next add up your unavoidable fixed expenses.

Expenses which are unavoidable each week or month would include a home mortgage or payments or taxes for local services and utilities; they would not include a weekly grocery shopping bill or fuel for the car. There is a distinction here – the second group are not fixed – we don’t know what the exact amount will be from month to month.

When we have looked at the above, subtract the essential payments from your income.

2. Variable Expenses

Now we will take a look at necessary monthly expenses that are not fixed.

This would include such as fuel bills, weekly grocery shopping bills and utility bills such as electricity, telephone and gas.

By taking a look at each of these expenses, we should also be able to reduce the cost of a lot of them, perhaps substantially.

Grocery shopping in particular is an area where with some handy tips you will be able to make big savings on our food budget.

Take a look at these posts to help you save money on variable expenses:

3. Non-Essential Expenses

This is the fun stuff, the extras we spend money during the month.

This is often an area where we have the most wiggle room to reduce our expenses. This can lead to a personal budget that is on the positive side, or even one that has a lot left over each month.

Do we need to eat out so often when a home cooked meal may be less expensive AND a more healthy option?

Is it necessary to buy a new pair of shoes every second week?

Do we need to redecorate or are we indulging ourselves unnecessarily?

These are some of the questions we can ask ourselves to help balance our personal budgets.

Of course we need to live and have pleasure in life. Making mindful purchasing decisions is the way to go if you want to have more money in your budget.

There are a lot of things that just aren’t that important for me to spend money on. They don’t do enough for my pleasure level or happiness level to justify the expense. Takeout food and cable fall under this category for me, so I don’t spend money on them.

But other non-essential expenses do mean a lot to me and add to my life, so I spend money on them. I like eating partially organic and I love going to see live music so those are things I prioritize into my personal budget.

We are all different; figure out your essential non-essentials, and reduce or cut the rest.

3 Powerful Personal Budgeting Tips

1. Don’t Overcomplicate Personal Budgeting

There are far too many of us who ignore the basics of personal budgeting and make the whole process far more complicated and less likely to succeed than it ever need be.

The basics of personal budgeting are simply setting our expenses so that they are compatible with our income. In other words, making sure we are living within our means. It sounds simple, but not many of us do it.

If you are not making enough money to afford basic expenses, you will need to look into earning more money. Here are posts that will help:

2. Plan for Impulse Purchases

You need wiggle room in your budget. If your budget is too strict, just like when a diet is too strict, you are more likely to cheat.

You want to feel positive about budgeting; if you don’t, you’re going to stop budgeting. It’s plain and simple – you will rebel against yourself (also called self-sabotage).

Since we want none of that, build in discretionary money or a monthly allowance into your budget.

Yes, do this even if you are working on paying down debt.

We want to keep your motivation high for budgeting. Your discretionary money doesn’t have to be a large amount. But adding this into your budget will make a difference in how you feel about personal budgeting.

The goal is to make it easier to stick with a personal budget long-term.

3. Reward Yourself For Coming In Under Budget

If all you do when you come in under budget for the month is put the rest of that money into savings, you’re not going to get that hit of dopamine that makes you feel rewarded.

To make sticking to a budget, stick, I want you to take 20% of whatever amount you came in under budget, and spend it on yourself.

So if you came in $100 under budget for the month, spend $20 on whatever your heart desires: fancy donuts, new makeup, a book, whatever.

If you have a surplus of $200 for the month, you can spend $40 of that surplus, and save the rest.

This is a powerful budgeting hack that rewards you when you come in under budget, keeps budgeting fun (budgeting should be fun!), and motivates you for the next month.

This personal budgeting tip sets you up for long-term budgeting success much more than the squirrel-away-all-the-surplus ever could.

Best Personal Budgeting Tools

These are my top three favorite personal budgeting tools. They all have different functions, and all can help you massively improve your financial situation.

1. Personal Capital Budgeting App

A super easy way to keep track of your money is using the Personal Capital budgeting app.

It tracks income, expenses, debt, investments, and gives a nifty report at the end of the year.

It does SO much for free – I think everyone who is interested in keeping track of their money and improving their financial situation should use this personal budgeting tool.

Get it for free here.

2. Trim

Trim is a personal finance app that is like a tiny Dave Ramsey fairy looking at your expenses, finding ways to reduce them, and saving you money.

In less Dave-Ramsey-flying terms, Trim is like a virtual assistant for your finances. Trim analyzes your spending, and saves its users $620 on average. Could you use an extra $620?

This budgeting app negotiates cable, internet, phone, and medical bills, cancels old subscriptions, and more.

Try Trim for yourself here.

3. Acorns

Acorns is a personal budgeting tool that helps you invest your spare change automatically.

One of the ways to make saving money easier is to automate it.

If you have to consciously think about putting aside money to save or invest it, you won’t do it as often, which means less moolah for you over time.

Acorns is a simple app that rounds up your spare change from purchases, and invests it for you. It makes saving money super easy and painless because it takes away the remembering factor.

Try out Acorns here.

Personal Budgeting Pdf

Are you super pumped now about starting your own personal budget?

I hope so!

I made a personal budgeting pdf that you can have for free – print it off and use it to start getting your money organized and under control!

You can grab your own copy of the personal budget template HERE.

Personal Budget Tips – Final Thoughts

Personal budgeting should be an ongoing process. You don’t set up a personal budget once and then forget about it. But once you have your budget set up, it can take just 20 minutes of your time a week to stay on track.

As time goes by and you follow your personal budget, you could see your disposable income grow and your credit card bills fall. This should make the ongoing process of personal budgeting easier and more motivating the longer you stick with it.

For More Personal Budgeting Fun, Read These Posts:

Pin these personal budget tips to save:

Personal Budgeting: 3 important tips to finally Get Control of Your Money (woman holding stack of $100 dollar bills)

What do you find the most challenging in starting or sticking with personal budgeting?

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