A personal budget is a financial tool used by individuals and families that helps create a plan for their monthly income and expenses. The budget includes sections for both income and expenses. The user’s expenses are further separated into spending categories which helps make planning easier. Personal budgets also may include a section for tracking the user’s actual spending, although this is not required.

There are many different styles of personal budgets available. Each type of budget attacks planning in its own way, and all of them come with their own set of pros and cons. These budgets can also be found in various forms — including a physical paper budget, a spreadsheet, and other forms of electronic budgets and apps.

Our favorite style of personal budget is a zero-based budget. The goal of zero-based budgeting is to provide the user with a maximum amount of control over their money. It accomplishes this by planning for every penny that is earned and spent each month. Although we have personally found the greatest amount of success using this style of budgeting, the most important thing you can do is to get started using any style of budget and stick to it.

 
 

Why Should I Learn How to Budget?

So, why would you need to create a personal budget anyway? Here’s why:

  • Budgeting gives you a clear, visual picture of where your finances stand each month.
  • It helps you to save money on the things that don’t matter so you can spend on the things that do.
  • It teaches you financial discipline.
  • Rather than making assumptions about how good (or bad) you are doing, budgeting requires you to face the actual facts of your financial situation.
  • A personal budget creates a plan that dictates how your money will work for you.
  • You will start to “find” money you didn’t know you had (or that you were spending).
  • You will learn how to live within your means.
  • Budgeting helps you track and see your results.
  • Most importantly, it gives you control over your money and your life.
 

What Having a Personal Budget Means for You

A lot of people are scared to start a personal budget because they think it’s too restrictive. They cling to the notion that creating a budget means they’ll never be able to buy what they want EVER AGAIN. In reality, this couldn’t be further from the truth.

Your monthly budget will help you get more of what you truly want, not less.

A personal budget is simply a monthly plan for your income and your spending. Using a budget template helps you decide what you are going to do with the money you make each month. It helps you save money on the things that don’t matter so you have more to spend on the things that do.

It’s really as simple as that.

Related: How to Budget When You are Broke

 

Will a Personal Budget Work for Me?

Are you deep in debt and desperate to find a way out? Using a budget can work for you. Do you make a six-figure income but can’t figure out where all your money is going? Starting a personal budget can help. Do you fall somewhere in between? Budgeting can help!

Learning how to budget your money is the most important financial skill you can master. Best of all, anybody can do it!

Of course, you still have to do the work. Although budgeting isn’t rocket science, it doesn’t automatically fix the financial problems that ail you. To make a budget work, you must:

  1. Create a realistic budget.
  2. Try your best to stick to it.
  3. Be honest with yourself.

If you do these three things, I promise that you WILL see positive results!

 

3 Ways to Get Started Budgeting

Ready to get change your financial life? Here are three ways you can get started today!

  • Paper Budget — One of the greatest things about creating a budget is that you don’t need a lot of stuff to get started. In fact, all you need is a pen and paper. This is how we started our first budget, and it is still how we handle our personal budget to this day. Follow our step-by-step guide on how to budget and start your own budget in less than 10 minutes!
  • Spreadsheet Budget — Using a spreadsheet is a great way to make your own personal budget. Simply create your spending categories, plug in a few formulas, and let the spreadsheet do all the calculations for you. You don’t even need to be a spreadsheet guru to make this work. Simply follow our guide on making a budget in Excel to start right away!
  • Budgeting Apps — If you enjoy using technology to make your life easier, you’re in luck. Web and mobile apps are all the rage, and there are dozens of apps that can help you create a personal budget. Check out our list of the best budget apps to find the right fit for your budgeting needs.
 

Other Tools to Consider

Creating a personal budget is the first step in getting your financial house in order. With that said, it is only one of the three most important tools you should have in your financial toolkit. To make the most of your budget, consider using these tools as well.

  • Expense Tracker — A budget is the monthly plan for your money, but you still need to track your actual results. That is where tracking your spending comes in. At the end of every month, be sure to track your monthly expenses and compare them to your budget. This shows you how well you stuck to your plan and helps you to make adjustments to your budget as needed.
  • Emergency Fund — Unfortunately, life doesn’t happen in a bubble and neither does budgeting. Things happen, and unexpected expenses can pop up and ruin the most carefully laid plans. However, if you have an emergency fund in place, you can use it to smooth out the rough edges and carry on with your budget as if nothing ever happened. Learn more about emergency funds here.
 

Final Thoughts

Most of us have searched high and low for quick tricks and simple remedies to cure our money woes. The solution, however, doesn’t lie in fancy gimmicks or crazy schemes. It has always been right in front of us — budgeting.

Creating a realistic budget means not scrambling to pay your bills every month. It means you can save money on the things that don’t matter so you have more to spend on the things that do. Most importantly, a personal budget helps you gain control over your money so you can lead a more peaceful life.

Sounds pretty great, right? Use the steps above to get started right away!

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