top of page

How to Create a Personal Budget That Actually Works

 

Checklist for Retirement


Creating a personal budget is one of the most empowering financial moves you can make. It’s a tool that not only helps you control your money but also allows you to direct it toward the things that matter most—whether that’s saving for the future, eliminating debt, or simply having peace of mind. A well-planned budget can transform someone’s financial life. Here’s how to build one that actually works for you.


1. Start by Tracking Your Expenses

The foundation of any successful budget is understanding where your money is going. Begin by tracking all your expenses over a month. Be as detailed as possible—categorize your spending into groups like groceries, transportation, entertainment, dining out, and recurring bills.


There are many tools to help with this, from mobile apps like Mint or YNAB to old-fashioned spreadsheets. You may be surprised at where your money is really going—small expenses like coffee or impulse buys can add up quickly. The key is to capture every dollar, so you can make informed decisions moving forward.


2. Prioritize Saving

A budget that works long-term is one that builds wealth, not just covers expenses. Savings should be a priority, not an afterthought. Ideally, aim to allocate at least 20% of your income toward savings. This could include:

  • Emergency Fund: Set aside enough to cover 3–6 months of living expenses.

  • Retirement Savings: Max out your 401(k) or contribute to an IRA.

  • Other Financial Goals: Think about saving for big purchases, vacations, or even a down payment on a home.


If 20% sounds daunting, start small and increase your contributions gradually. The important thing is to make saving a habit and treat it like a non-negotiable expense.


3. Create a Flexible Budget Plan

The 50/30/20 rule is a great framework to start with. It suggests that 50% of your income goes to necessities (housing, utilities, groceries), 30% to discretionary spending (entertainment, dining out), and 20% to savings and debt repayment.

This plan is flexible enough to adapt to most situations, but you can always tweak it based on your financial goals. If you’re aggressively saving for a house, for example, you might decide to cut back on discretionary spending and allocate more toward savings.


4. Cut Back Where It Hurts Least

If you find that your expenses are higher than you’d like, look for areas where you can cut back without dramatically affecting your quality of life. Here are a few examples:

  • Subscriptions: Are there streaming services or memberships you don’t use?

  • Dining Out: Could you limit eating out to once a week and cook more meals at home?

  • Utilities: Small changes like adjusting your thermostat or switching to energy-efficient bulbs can reduce costs.


The goal isn’t to eliminate all fun spending but to identify areas where you can make sacrifices that don’t feel painful.


5. Regularly Review and Adjust

Your budget is a living document. Your financial situation and goals will change over time, and your budget should reflect those changes. Schedule a monthly review to assess how well you’re sticking to your plan.

  • If you’re under budget: Great! Consider moving any extra funds into savings or using them to pay down debt.

  • If you’re over budget: Don’t panic. Adjust your spending or income expectations for the next month. Unexpected expenses happen, and that’s why it’s important to be flexible.


6. Make It Easy to Stick to Your Plan

One of the biggest challenges of budgeting is sticking to it over time. Automating your finances can make this process a lot easier. Set up automatic transfers to your savings account, and consider automating bill payments so you don’t miss deadlines or incur late fees. You’ll remove temptation and stay on track without constantly monitoring every dollar.


Final Thoughts: Small Steps Lead to Big Wins

Creating a personal budget doesn’t have to feel overwhelming. Start with small, manageable steps—track your expenses, prioritize savings, and make gradual adjustments. Remember, the goal of a budget isn’t to restrict you; it’s to empower you to achieve your financial goals with confidence. Stick to your plan, and over time you’ll see the benefits compound!


Contact an Infinitas financial advisor about social security

CONTACT INFINITAS

Thanks! We'll be in touch soon.

The Financial Advisor (s) associated with this website may discuss and/or transact business only with residents in states which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state. Please check Broker Check for a list of current registrations.  Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth. Information presented on this site is for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any product or security.

 

We use cookies to help give you the best experience on our site. If you're okay with that, keep browsing. Read our cookie policy here.

Privacy Notice  |  Online Privacy Policy  |  © 2023 Infinitas

bottom of page