To stay in the black, spend less than you earn. Simple, right? And yet doing it is a different story. That’s why budgeting—making a plan for how to spend your monthly income—is essential to reaching your financial goals.
Whether it’s to quickly build up emergency savings, take a bucket list trip, come up with a down payment, or start investing—or just to live comfortably between paychecks—identifying your goals is the first step to accomplishing them. Next, begin budgeting by documenting where you want your money to go each month, including essential expenses (needs, like food and housing), discretionary expenses (wants, like entertainment and travel), and savings. (Fidelity customers can get a budget made for them in seconds.) Once you’ve got that down, consider these real-world budgeting tips to help you stay on track.
1. Find a system that works for you
Tracking expenses is an important, but sometimes tedious, aspect of budgeting. Finding a system you like can help. Jessica Martin, 37, from Vernon Hills, Illinois, uses her credit card’s capabilities to track how much she spends in different categories. Martin, who works in marketing, studies her monthly breakdown to check if she needs to rein in her spending in a particular area the following month.
Old-school methods can work too. Kelsey Ogletree, 37, who runs a communications business in Florence, Alabama, saves printed supermarket receipts. “Doing the actual math with paper receipts helps me more than looking at a spending report online,” says Ogletree. When her family goes over budget, they prioritize vegetarian meals to offset higher meat costs and get creative using what’s in the pantry. (See other ways to spend less on food.)
2. Get inspired
Research shows that visualizing a goal can help you accomplish it. “In the lead-up to a trip, I find a pretty photo of the destination and make it my phone’s wallpaper,” says Kayla Webley Adler, 40, a magazine editor in Brooklyn, New York. “It helps me resist the urge to shop for extra clothes and other stuff I don’t need. It’s a reminder to save my spending for my trip so that I can experience the journey to the fullest.”
New York-based content creator Elysia Berman, 37, says she religiously uses a budgeting app that not only helps create a savings plan and report spending trends, but also sends daily inspiration texts (think: “It’s not about what you earn; it’s about what you save”) to stay the course.
3. Connect with an accountability partner
Joining forces with someone who shares a similar goal could give you the motivation and support to commit to budgeting. This could be a simple arrangement with a friend or a more structured setup with a group of people (like a running club, but for money). Kieran Flahive, 34, a Chicago professor, talks money and budgeting with his father often. He says watching his father stick to the family budget through his childhood inspired him to fine-tune his own finances as an adult.
4. Monitor lifestyle creep
Lifestyle creep, or spending more as your income rises, can take a bite out of potential savings. Leslie Harris, a 41-year-old travel agent in West Henrietta, New York, regularly studies her spending to identify where it might be ticking up. “I always find what I can pull back on,” she says. “It’s very humbling, because everyone thinks that they are good with money.” To track your own lifestyle creep, compare your spending before and after a pay raise—then decide if any increases are important to you or if you have some trimming to do.
5. Keep savings out of sight
Inconsistent income, especially for contractors or commission-based workers, can complicate budgeting. When income comes in spurts, you might feel flush—until your bills come due. To stay on track, Libby Fish, 30, an Austin, Texas real estate agent who earns commissions, automatically deposits her paycheck into a bank account she uses to pay taxes and another 20% into a high-yield savings account. The idea: You won’t spend it if you don’t see it. Even in lower-income months, Fish avoids accessing her savings to make up the difference. “I know I have a reserve I can use, but try my best to keep it out of sight and out of mind,” she says.
6. Pay attention to how spending and saving make you feel
Recognizing how recent purchases made you feel could help you focus spending on things that matter, says Berman. Next time you spring for something out of the norm, reflect on the emotional aftermath. Maybe hiring a housecleaner buoyed your spirits during a stressful month. But that kitchen gadget (that you were sure would change your life) has just been taking up counter space. To replace the momentary boost you get from buying something new, try calculating how much you’ve saved in a week, month, or year and focusing on how good that makes you feel instead.
7. Be patient and reward yourself
Not beating herself up when the budget breaks has made it easier for Harris to stay the course. “I give myself grace knowing I’m working toward something,” she says. “It helps lessen the anxiety around budgeting.” Remember that budgeting is about the long game, so persistence is more important than perfection. When you do hit a savings goal, consider celebrating with a reward for yourself. Try coming up with incentives that don’t cost much or anything, like an hour listening to a favorite podcast or reading a book, a hot bath, or a walk outside on a nice day.