The basics of creating a budget are pretty simple but creating a budget strategy may not be. First, you’ll need to decide on your financial goals. Basically, the who, what and why for making your budget. Then set up your budget categories on a monthly schedule and stick to it.

If you are reading this perhaps you are like most of us and forget the ‘stick to it” part or maybe you struggle with the first step. Either way, it’s important to know how you spend money. A good budget is designed to help you do just that and reach your financial goals.

Tip: Keep in mind, not all goals are created equal and everyone has unique financial goals that will change over time.

Are you starting your first job after college and want to figure out what your paycheck can cover? Or are you trying to pay down credit card debt?

Everyone’s goals are different. Whether your goal is to reduce your debt or finance a remodeling project, it should be the core of your budget. As you pay attention to income and expenses, you’ll aim towards that goal.

Below are some tips to help you reach your financial goals and feel better managing your money.

Set Realistic Goals for Your Budget

You may have hopes of sending 50% of your take-home pay to paying off your debt. But that aggressive strategy may impact how you pay your bills each month!

It’s great that you realize the importance of eliminating debt, but don’t make it impossible to achieve. The sacrifices you may have to make may outweigh the benefits of being debt-free so quickly. Instead, focus on what is realistic and achievable.

Tip: Start with small goals first and gradually increasing your constraints as you find success.

Person counting dollar bills.

Be Patient

Scientists have studied habit formation for more than a century. Research suggests that it takes at least 66 days to actualize a positive habit.

Sticking to a budget or adding new strategies to reduce spending is not going to be easy and it won’t happen overnight. Give yourself time to think about your financial goals. Then understand your expenses, and investigate new strategies that can reinforce savings habits.

Tip: A great first step is to monitor your spending for two full weeks. Tracking where you spend your money will help visualize where saving is possible.

Budget for Unexpected Expenses

There will be very few if any, months where your budget will turn out exactly to the penny as you had planned. The longer you stick to a budget, the easier it will be for you to plan in advance for expenditures. You’ll also get better at making modifications if your income increases or decreases.

Expect to feel obligated to contribute a gift or attend an out-of-town event. You’ll also have to repair an appliance or replace a broken phone or experience a health emergency. Of course, there is the possibility you may inherit, find, earn, or win a big bonus of cash! But it is inevitable there will be unexpected expenses, emergencies, and unavoidable reasons to go over budget.

If you don’t have an emergency fund, make building a healthy one a financial goal.

Tip: Use the 3-tier emergency fund goal system. Tier-1 save $500.00, tier-2 save $1000.00, tier-3 save $3000.00. If you have an emergency and use your funds, start the next month saving toward your next tier. If you max out the tiers up your game to 1, 3, and 6 months living expenses.

Eyeglasses on top of a notebook near an open Macbook

Remember Yearly Expenses

You could go 11 months on a budget thinking everything was working fine. Then at the end of the year, get hit with a yearly expense you had forgotten.

Such things as car registration or license tag fees, taxes on freelance work, insurance premiums, membership fees, or subscriptions may occur infrequently enough that you forgot you had to pay them. It may take a year for you to include every expense to fine-tune your budget.

Budgets Cut Out Impulse Spending

Have you ever filled your online shopping cart and then abandoned it? Online window-shopping is an actual trick people use for making spending decisions.

It doesn’t cost anything to look and sometimes you get emailed a coupon the next day! Doing this allows you more time to think about whether or not you really need to buy those items. For actual in-person spending, don’t feel pressured to make a big financial decision in a few minutes. Always make sure a purchase aligns with your financial goals.

Tip: For big purchases that can be emotional such as a car. Tell yourself before you shop what your timeline is. “I will not buy today no matter what, I will come back tomorrow.” Stick to your plans and you will save money in the process.