13 Pro Budgeting Tips for People Who Wonder Where Every Paycheck Goes

A woman places money in her savings envelope. She used the envelope method to get on track with her spending. The other envelopes say Fun and expenses.
If you have trouble sticking to your budget, the envelope system is a budgeting tool that can help you succeed without having to constantly track your spending. Tina Russell/The Penny Hoarder

A monthly budget is like Google Maps for your finances: You follow it because you don’t know where you’re going without it.

If you’re new to budgeting, don’t be discouraged by a few — or many —  wrong turns and closed roads along the way. The longer you stick with it, the better you get.

And with a few simple tips, you can be well on your way before you know it.

13 Budgeting Tips Anyone Can Follow

Whether you’re trying to pay off credit card debt or just boost your savings, here are some budgeting tips that will help you make (and stick to) your budget.

1. Set Your Goals Before You Make Your Budget

Without a goal, a budget is just a spreadsheet that tells you to have less fun.

Think about what you want in the next five to 10 years, and figure out what financial situation you need to get there. Whatever your goals are, know that any sound financial foundation starts with an emergency fund.

You might then want to pay off debt, save for a down payment on a home, or increase your savings.

Decide where you want to be financially next year and the year after. Knowing what you want to do with your money will guide you as you make your budget, and it will greatly increase the likelihood that you’ll stick to it.

2. There’s No One Size-Fits-All Budget. Find a Plan That Works for You

There are so many budgeting methods out there, and every guru says theirs is the best. But ultimately you have to choose the one that works for you.

If you’ve got an ambitious goal, we recommend trying a zero-based budget first.

To make a zero-based budget, start by prioritizing your expenses from essential to nonessential. Then, assign every dollar in your paycheck a “job” on the list until you run out.

The most important things — housing, food, minimum debt payments — get taken care of first, and you can disburse the remaining money for your goals and fun in their order of importance to you.

Zero-based budgeting is great for Type A planners. If you prefer to be a little more loosey-goosey, a 50/20/30 budget is a great option. With this approach, you don’t have to think too much about your expenses. You just allocate 50% of your income to your needs, 20% to savings and 30% to wants.

3. Use a Budgeting App or the Envelope System to Track Your Spending on the Go

A woman creates three different envelopes to control her spending. The envelopes say expenses, savings and fun.
Tina Russell/The Penny Hoarder

It’s hard to lug around your laptop or binder to keep up with each budget category, so a budgeting app is a great tool for updating your budget on the go. There are many out there, whether you like to enter each transaction manually or see everything updated automatically.

If your goal is to take an intense look at your spending, manually tracking your transactions is going to work best. Once you’ve been budgeting for a while and you’ve got a grasp on your spending, syncing transactions automatically works fine.

If you still can’t stick to your budget, the envelope system can help you succeed without so much emphasis on constant tracking.

After you decide how much money goes toward each of your expenses, put the money you’ll spend for each expense in a given week into separate envelopes and carry them with you. Once an envelope is empty, you’re done spending in that category. You can keep receipts in the envelope and examine your purchases later.

Envelopes are best for categories you’re prone to overspending on. You probably don’t need envelopes for things like gas and utilities, because you’re not likely to go on a gas-buying spree.

Popular categories for envelopes are restaurants, groceries, clothes and entertainment.

4. Use the Past to Predict Your Future Income and Expenses

Whether you choose a zero-based budget, 50/20/30 budget or some other method, you’re going to have to calculate your income and the amount of money you want to put toward every category or individual expense.

Salaried employees will get off easy when they calculate their incomes. If you have a variable income or side hustles, you’ll need to do some digging.

Look back at your income from the past six months, or as far back as you can if you’ve been at your current job for less time. Then find your average monthly income and the average amount of each paycheck.

Expenses like utilities can also be unpredictable. Check your online statements to see which months were higher versus which were lower so you can make future budgets. You may not be able to take that impromptu weekend getaway the month your electric bill will be $300, but it might be totally feasible during a month it’s going to be $75.

5. Make a Monthly Budget AND a Budget for Each Paycheck

A woman draws a budget in a bullet journal.
Tina Russell and Chris Zuppa/The Penny Hoarder

Since most bills are monthly, it’s important to make a budget for the entire month to get a clear picture of everything due. But by breaking that down further into paycheck-by-paycheck budgets, you can pace your spending so you don’t end up penniless by the 20th.

You can make categories as vague or as specific as you want, but put as many barriers in place to prevent yourself from overspending in the first half of the month.

This is another time when the envelope system helps you, but you could do the same thing with reloadable gift cards for specific stores.

6. Don’t Confuse Infrequent Expenses With Emergencies

These aren’t the unexpected expenses that you’d cover with your miscellaneous or emergency categories. Infrequent expenses are the charges that come up once or twice a year — but we always seem to forget will happen.

Like when it’s Dec. 23 and you’re still not done with your holiday shopping. Who could’ve predicted Christmas would be on Dec. 25 AGAIN?!

Pro Tip

Examples of infrequent expenses include things like auto insurance, car registration, license renewal, vet visits, car repairs and membership fees.

Keep a chart that includes your semiannual and annual expenses to determine what you need to save every month to cover them. Open a separate checking account or savings account where you put money every month to cover these expenses.

7. Remember the Obvious: You Need to Spend Less

Once the planning is done, it’s time for the hardest part: sticking to your plan.

If you’re in the habit of spending more than you make, your first priority is to find ways to save money.

We don’t mean you need to find better sales and clip more coupons. As much as we love a good coupon stack, the most important thing you can do is buy and spend less.

Some of our favorite tips to cut spending are:

  • Make a meal plan, and stick to your grocery list.
  • Prep meals on Sundays so you’re less likely to eat out during the week.
  • Opt for free events in your area instead of pricy activities or bars.
  • Try running and body-weight workouts instead of paying for a gym membership.

There are countless ways to save money. Our best tip: Start by slashing expenses that are making a big dent in your budget instead of shaving pennies off already manageable ones.

Do everything you can to resist the temptation to make impulse purchases or spend beyond your budget. An easy way to do this: Leave your credit card at home, and use cash envelopes or a debit card.

8. Use the 30-Day Rule to Stop Impulse Buys

If you still need to curb impulse buying, follow the 30-day rule: When you want to buy something that’s not in your budget, make note of the item in question for next month’s budget and revisit it in 30 days. If you still want it, you can consider buying it if you can afford it.

Online shoppers can use the Icebox Chrome extension that allows you to choose a 30-day “cool off” period before you can buy something.

9. Negotiate Your Bills to Save Money

People often take for granted that what they’re paying for their phone, internet and insurance is what they have to pay. By contacting your providers to negotiate your bills, you could lower your bills once or twice every year.

You can do this yourself by calling all your companies or using a negotiation app like Trim or Empower.

If you’re trying it yourself, be friendly, ask for more than you want, and back down from there. Stop when you feel you’ve reached a good deal. Oh, and be prepared to be on the phone for a while.

10. Remember That Things Will Go Wrong

Student loans and credit cards aren’t paid off overnight. And the perfect budget isn’t made in a day.

Things will change and go wrong. Impulse purchases will be made, and budgets will get obliterated by life’s little surprises. The most important tip for budgeting is to not give up.

Pro Tip

If budgeting continues to be difficult, add a small "miscellaneous" category to cover surprise expenses. Make a category to cover all of them, and figure out where to put them later.

When things go wrong, alter your budget to compensate. Move money from one category to another, put less in savings, or try a side hustle to add some wiggle room. And know that sometimes you’ll find yourself ripping up the entire budget and starting again from scratch in the middle of the month.

Eventually, you’ll get this whole budgeting thing down. But it’s going to start with a lot of bumps in the road.

How to Budget on an Inconsistent Income

A man places money in a tip jar.
Chris Zuppa/The Penny Hoarder

Living off tips, sales commissions or freelance work can make for a flexible lifestyle, but it also makes it hard to budget.

When you have an inconsistent income, you can follow all the budgeting tips above. But there’s one thing you should add to your budget to make it easier for yourself during low-income months.

11. Have an Income-Sinking Fund for When Your Income Is Less

When you calculate your income and get your monthly average, compare it with your income each month throughout the year. In months you expect to make more than average, take the difference and transfer it to your income-sinking fund. It’s a separate account where you put money you plan to take out in the near future for a specific purpose, such as supplementing your income on low-earning months.

During months when you expect to make less, you can withdraw up to your monthly average to help with expenses.

Tips for Budgeting With a Partner

Another challenge is budgeting with a partner. It can feel like too many cooks in the kitchen are ruining the budget soup, but when there are two incomes, lives and futures at stake, everyone involved needs to have a stake in the budget.

12. Hold a Monthly Budget Meeting

The first tip is to have a monthly budget meeting that both of you are required to attend.

Whoever enjoys budgeting more can make the budget, but the other partner still has to contribute something. Whether they change one line or many, we repeat: They must contribute.

FROM THE BUDGETING FORUM

The budget can still be flexible and change as needed during the month, but both partners should be consulted about big changes. Feeling included is important to working as a team on your finances.

13. ‘Subtle’ Hints Can Help if Your Partner Hates to Budget

If your partner isn’t on board with budgets, they’ll need a little convincing.

Ashley Patrick of Budgets Made Easy tried having budget meetings with her husband, but he wasn’t interested.

Patrick desperately wanted her husband to be part of their financial planning, but he wanted her to handle everything. So she turned to money-saving guru Dave Ramsey’s podcast.

“The biggest thing that fully got him on board was playing Dave Ramsey podcasts in the car, especially when I did it on a long road trip,” she said. “Hours of Dave Ramsey helped change his mindset.”

Both people need to be flexible with the other’s priorities and supportive of their goals.

Budgeting together won’t be easy at first — but it’ll lead to a lifetime of financial strength and happiness.

Jen Smith is a staff writer at The Penny Hoarder. She and her husband paid off $78,000 of debt in less than two years on two less-than-average salaries. She gives money-saving and debt-payoff tips on Instagram at @modernfrugality.