20 budgeting tips for easy money management (2024)

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Budgeting is an essential part of a healthy financial life.

It allows you to create a spending plan for your money to ensure you always have enough for the things that are truly important to you. Rather than being restrictive, these 20 budgeting tips help you form a clear picture of your spending money and can help you discover extra income that you can use more efficiently.

People who budget successfully can set themselves up to get out of debt faster, achieve their savings goals over time and practice smart spending. The best part is that it only takes a few easy tweaks to your money routine to implement good budgeting habits.

Naturally, there are some things that are worth doing every day. We stay physically healthy by taking care of our hygiene and staying active. So why is it so hard to exercise this same kind of daily care to strengthen our financial foundation? Read on to learn about quick and simple things you can do every day to stick to your budget.

  1. Create your budget before the month begins
  2. Practice budgeting to zero
  3. Use the right tools
  4. Establish needs versus wants
  5. Keep bills and receipts organized
  6. Prioritize debt repayment
  7. Don’t forget to factor in fun
  8. Save first, then spend
  9. Start contributing to retirement now
  10. Split your direct deposit
  11. Expect the unexpected
  12. Plan for large purchases
  13. Include a contingency category
  14. Adjust your budget monthly
  15. Outline specific, realistic goals
  16. Observe a no-spend day
  17. Don’t be too hard on yourself
  18. Try cash-only budgeting
  19. Budget for your financial situation
  20. Be flexible

1. Create your budget before the month begins

To stay on top of your budget, plan ahead. A week before a new month starts, sit down and plan your next month’s activities and expenses.

For instance, you may have a road trip or vet appointment one month but not the next. Once you’ve planned your month, set a realistic budget.

2. Practice budgeting to zero

Budgeting to zero means tracking every dollar you earn and giving it a place in your budget until you don’t have a single dollar to spare.

Let’s say, for example, you earn $4,000 a month. After budgeting your savings contributions, investments, fixed expenses and any additional spending, you should have no money left over.

Budgeting to zero can show you where your money is going and give every dollar you earn a purpose.

Set yourself up with the right tools to ensure success from the beginning. Track your money with a budgeting app or use apps to keep track of money spent on shopping or healthcare costs. Powerful budgeting tools can help you track where your money goes, push you to prioritize your goals and bills and alert you if you spent too much on one category.

4. Establish needs versus wants

20 budgeting tips for easy money management (1)Image: 50-30-20-rule

“Needs” are anything crucial for your basic physical, mental and financial well-being — think food, rent and debt repayment. These should always be factored into your budget and can be found in Credit Karma’s budget calculator.

Consider the 50/20/30 rule, which allocates approximately 50% of your income to essential items, 20% to savings or debt and 30% to non-essential items that will enhance your lifestyle.

5. Keep bills and receipts organized

Keep your bills and receipts organized in case you need to refer back to a bill to dispute it. This may also come in handy for tax purposes.

You can choose to file documents physically via hanging files or expandable folders. If you opt for physical filing, sort your documents by account or by month, depending on what works for you. If you receive your bills and receipts mostly via email, you may want to file everything electronically.

6. Prioritize debt repayment

20 budgeting tips for easy money management (2)Image: credit-score

If you’re able, prioritizing debt payments may save you money on interest and reduce financial stress. It’s important to keep your debt down because it affects credit utilization. In general, it’s best to keep your credit utilization at less than 30% of your limit.

7. Don’t forget to factor in fun

Part of an ironclad budget is planning for fun in addition to everything else. When you put money aside for nonessential activities, you ensure there’s enough to enjoy without the risk of overspending.

Whether it’s a weekend getaway, a night out with friends or a special treat, setting aside a small amount of money each month is a great way to stay on top of your finances and avoid sacrificing fun for financial freedom.

8. Save first, then spend

Think of saving as a fixed expense and factor it into your budget accordingly. According to billionaire Warren Buffett, it’s essential to prioritize your savings, and he recommends automating contributions to avoid temptation.

9. Start contributing to retirement now

You’ve likely heard it before, but we’ll say it again: It’s never too early to start saving for retirement. If possible, consider maxing out your employer’s retirement matching program. Starting early can ensure that you don’t put extra strain on your budget further down the line as you attempt to catch up.

10. Split your direct deposit

If you have direct deposit through your employer, consider setting it up so that a certain percentage of your income goes straight into your savings account. This way, automation does the work for you.

11. Expect the unexpected

20 budgeting tips for easy money management (3)Image: plan-your-budget-in-advance

Sometimes, all the planning in the world can’t prepare us for unexpected expenses. Things like car repairs or trips to the emergency room are impossible to predict.

That’s why it’s crucial to factor an emergency fund into your budget. For starters, aim to save the smallest amount that will make you feel taken care of in an emergency. After that, experts typically recommend securing three to six months of expenses so you’re at peace in the event of an emergency.

12. Plan for large purchases

If you’re considering purchasing an expensive item like a new laptop or TV, the key is planning ahead. Decide a date that you want to make the purchase, and divide the price by the number of days you have.

For example, if you want to purchase a $1,500 computer in 300 days, you just need to save $5 per day. This keeps you from charging the item to a credit card, potentially putting you in serious debt and causing you to pay interest charges until you can pay the balance off.

13. Include a contingency category

Sometimes an expense won’t fit perfectly into your budget categories. That’s where having a contingency comes in handy. Here’s the catch: Ensure you’re not using it as an excuse to overspend in any of your other categories. If you find you’re consistently going over budget in food, shopping or any other area, consider modifying your budget instead of funneling it into your contingency.

14. Adjust your budget monthly

Your needs will change, and a budget shouldn’t be set in stone. Consider re-assessing your budget monthly to get a pulse on how well you’ve been sticking to it. If you notice you’re consistently overspending in one category and under-spending in another, even out your budget to make it more achievable.

15. Outline specific, realistic goals

Remember that the most easily achievable goals are SMART — specific, measurable, attainable, relevant and timely. Instead of saying, “This year, I want to save more,” try, “I want to have $1,000 saved for an emergency fund by December 31.”

16. Observe a no-spend day

Designate one day per week when you don’t spend any money aside from what’s absolutely necessary. This is an easy way to make sure weekly spending stays within your budget range.

If you’re having a hard time putting money away, consider a whole no-spend month. The idea is to go a whole month spending money only on the bare necessities and putting all the extra cash into savings.

17. Don’t be too hard on yourself

Getting used to a new budgeting routine may take a few months to make perfect. Your budget may not be perfect the first or the second time around. Be kind to yourself and your budgeting lifestyle as you settle into your new routine. Focus on making daily decisions with your budgeting goals in mind to help establish new habits.

Sticking to the plan will help you get the most out of your income and give you peace of mind that every dollar in your checking account is going to a specific purpose.

18. Try cash-only budgeting

Cash-only budgeting involves only using cash for all purchases and tracking spending on a regular basis. This budgeting method makes it easier to see how much money you have left to spend and make sure you stick to your budget.

Additionally, cash-only budgeting allows you to make conscious decisions about your spending since it forces you to pay attention to where your money is going.

19. Budget for your financial situation

For an effective budget that works long term, you’ll want to consider your financial situation. Hopeful budgeting — planning expenses based on possible income —can cause you to incur debt instead of savings. On the other hand, outlining a budget that ignores part of your income could lead you to waste money or overlook wealth-building opportunities like investing.

Set realistic goals for yourself, including savings, paying off debt and investing in your future. Factor in unexpected expenses, like car repairs or medical bills to ensure that you are prepared for those costs before deciding how to organize your funds.

20. Be flexible

Life is unpredictable, and sometimes our financial situation can change drastically. When budgeting, it’s important to have a plan and stick to it but also be prepared to make changes when necessary.

This can mean cutting back on some expenses, finding ways to save money or being open to new ideas and opportunities that can help you save money.

Being flexible with a budget can help you stay on track and confidently build a solid financial foundation.

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20 budgeting tips for easy money management (2024)


What is the 20 60 20 money management rule? ›

Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings. Once you've been able to pay down your debt, consider revising your budget to put that extra 10% towards savings.

What is the 50 30 20 rule for managing money? ›

Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

What is the 20 10 rule in budgeting? ›

The 20/10 rule of thumb is a budgeting technique that can be an effective way to keep your debt under control. It says your total debt shouldn't equal more than 20% of your annual income, and that your monthly debt payments shouldn't be more than 10% of your monthly income.

Is the 50/30/20 rule after taxes? ›

Key Takeaways. The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

What is the 80 20 rule in money management? ›


The 80/20 budget is a simpler version of it. Using the 80/20 budgeting method, 80% of your income goes toward monthly expenses and spending, while the other 20% goes toward savings and investments.

What is the 50 30 20 rule money saving expert? ›

By spending 50% of your income on your needs and 30% on your wants, you'll hopefully be left with 20% to put into your savings. So for example, if you take home £1,800 each month, you should aim to save £360. To help you stay on track, it's always good to have a savings goal — something to aim for.

Is $4000 a good savings? ›

Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.

What is the 40 40 20 budget rule? ›

The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.

What are the 3 C's of credit? ›

Character, capital (or collateral), and capacity make up the three C's of credit. Credit history, sufficient finances for repayment, and collateral are all factors in establishing credit. A person's character is based on their ability to pay their bills on time, which includes their past payments.

What is the 70 20 10 principle of budgeting? ›

The biggest chunk, 70%, goes towards living expenses while 20% goes towards repaying any debt, or to savings if all your debt is covered. The remaining 10% is your 'fun bucket', money set aside for the things you want after your essentials, debt and savings goals are taken care of.

What is the 20 20 rule in finance? ›

To start, the 20/20/60 rule uses the same three categories as the above rule with some percentage adjustments: 20% for savings. 20% for consumer debt. 60% for living expenses.

What is the 25 times income rule? ›

If you want to be sure you're saving enough for retirement, the 25x rule can help. This rule of thumb says investors should have saved 25 times their planned annual expenses by the time they retire, according to brokerage Charles Schwab.

What is pay yourself first? ›

What is a 'pay yourself first' budget? The "pay yourself first" method has you put a portion of your paycheck into your savings, retirement, emergency or other goal-based savings accounts before you do anything else with it. After a month or two, you likely won't even notice this sum is "gone" from your budget.

What is the best way to budget monthly? ›

50/30/20 rule: One popular rule of thumb for building a budget is the 50/30/20 budget rule, which states that you should allocate 50 percent of your income toward needs, 30 percent toward wants and 20 percent for savings. How you allocate spending within these categories is up to you.

What is the 20 60 20 rule management? ›

20% will be on board and ready to do what's necessary to implement the changes. 60% will understand the need for change, still be skeptical of it, but grudgingly willing to go along. 20% will not be on board at all.

What is the 70/20/10 rule money? ›

The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.

What is the 20 20 60 rule? ›

One method that stands out for its simplicity and effectiveness is the 60-20-20 rule. This approach involves dividing your post-tax income into three categories: 60% for necessities, 20% for savings, and 20% for wants.

What is the golden rule of money management? ›

Golden Rule #1: Don't spend more than you earn

Basic money management starts with this rule. If you always spend less than you earn, your finances will always be in good shape. Understand the difference between needs and wants, live within your income, and don't take on any unnecessary debt. Simples.

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