Learn to Love Budgeting With These 9 Expert Tips

When you hear the word "budget," what comes to mind? If you're like most people, it probably involves looming stacks of bank statements and seeing dollar signs in your sleep. Budgeting, after all, is often associated with strict habits and even stricter rules.

But this couldn't be further from the truth. In fact, a budget is the exact opposite; it's a tool you can use to achieve financial freedom.

"Many people think of budgets as a form of restriction or punishment, where they can't enjoy their hard-earned money," says Bola Sokunbi, a certified financial education instructor, author and founder of Clever Girl Finance. "[But in reality, a budget means] you are telling your money what to do."

Consequently, budgeting can help you get out debt, prepare for emergencies and gain control of your finances. It's all about managing your money and, ultimately, achieving your financial goals.

If the idea of budgeting makes you cringe, try shifting your mindset. Look at a budget as a blueprint or map instead of an oppressive rule book. Consider budgeting as a way of making your money work for you. With this type of outlook, you'll be more likely to stay afloat as you dive into the world of budgeting.

Your Path to Financial Freedom

Creating a budget is a lot like adopting healthy eating habits or starting a fitness routine—it takes time to determine what works and (and doesn't work) for your preferences, lifestyle and personality.

"You have to get into the groove," says Jamila Souffrant, a certified financial education instructor, founder of Journey to Launch and host of the Journey to Launch podcast. "Give yourself some grace and [space for] adjustment, especially if you've already tried this before."

While you're at it, know that budgeting is an ever-changing practice. "[It's] not a one-time thing and you're done," shares Souffrant. "When you have a budget, it's a recurring process."

Even financial experts, including Souffrant, are always changing their budgeting approach. "The way I budget today is not the way I budgeted last year or three years ago," she says. "It's always going to change—and that's okay."

Essentially, budgeting is a life-long learning experience, and being kind to yourself will only set you up for success. Ready to get started? These nine expert-approved tips for starting a budget will set you on the path to financial bliss.

1. Determine a Goal

Ask yourself, Why do I want to make a budget? This can involve any facet of financial health, like paying off debt or building an emergency fund. It might even have multiple parts or aspects. By clarifying a reason for creating a budget, you'll have clear motivation for every move.

While there isn't a right or wrong answer, it's wise to make your goal as specific as possible. For example, instead of aiming to "save money," strive to "save $500 in five months." Adding these specific details will only strengthen the mold that shapes your budget.

2. Name Your Budget

Contrary to popular belief, you don't have to call your budget a "budget." This is especially true if the term makes you feel intimidated or stressed.

Sokunbi suggests giving your budget a name that makes you want to use it. For instance, you can call it something fun, like "My Path to Financial Freedom" or "My Plan to Achieve a Fabulous Life." Don't hesitate to get creative and personal with it, too. Pick a name that speaks to your goals and aspirations for a source of built-in motivation.

3. Choose a Method

We all make, spend and handle money in different ways. So, in order to make a budget that works for you, give yourself permission to find a method that suits your needs.

After all, budgeting is not a one-size-fits-all process, says Sokunbi. "Don't be afraid to try different budgeting methods. Focus on finding the budgeting method, or hybrid method, that works for you."

The internet is jam-packed with budgeting techniques, but if you're not sure where to start, Sokunbi recommends these three popular methods:
  • Percentage Method. According to Sokunbi, this involves breaking up your spending into percentage categories based on your income and financial goals. For example, you can use 50/30/20, where 50 percent is for needs, 30 percent is for wants and 20 percent is for savings. 
  • Envelope Method. "[This is] where you split your income into envelopes designated for specific expenses," explains Sokunbi. "Once an envelope is depleted, you can no longer spend in that category. Or, if an envelope has leftover [money], you can designate it to another category."
  • Using a budget app. "Many apps use algorithms to predict your future spending and help you categorize your budget based on past expenses and spending," says Sokunbi. But keep in mind that apps aren't always perfect, as they can't predict unplanned expenses or emergencies. Popular budgeting apps include Mint, Wally and You Need a Budget.
Budgeting can also be done with pen and paper, Google Sheets or Microsoft Excel—just to name a few.

Sokunbi suggests testing out one new budgeting method each month until you find one you like. When you take the time to implement each method, you'll be more likely to find one that sticks.

4. Understand Your Expenses

Understanding your expenses is an essential component of budgeting. It involves tracking all your spending, from utility bills to irregular expenses like holidays. As a result, you'll be able recognize how your financial obligations fit into the bigger picture. 

It also increases awareness of where your money is going, which is particularly important if you feel out of touch with your spending habits. "Many people don't realize how much money goes toward [things like] restaurants and picking up food here and there," says Souffrant. 

To better comprehend your expenses, take a tip from Souffrant: Gather your statements from the last one to three months. Grab a calendar (or notebook) and log what you've actually spent during that time. Not only does this provide a baseline for your new spending plan, but it lets you determine where you can cut spending, too.

5. Understand Your Income

Similarly, understanding your income allows you to give every dollar a purpose. This includes your regular salary plus all types of income, such as rental income, alimony or child support. And if your income is irregular? Use your lowest monthly estimate. Next, decide what you'll do if your income surpasses that estimate. This ensures any earnings beyond this amount already have a purpose.

Plus, by knowing your total income, you can budget based on exact numbers. For example, let's say you want to put 20 percent toward savings. After computing 20 percent of your total income, you'll have a precise dollar amount that indicates how much you should put away in a given period. It's personalized guidance at its finest.

6. Create a Sinking Fund

A "sinking fund" is money that's put away, bit by bit, toward an upcoming planned expense. It's different than an emergency fund, which is for unexpected expenses that might happen. A sinking fund, conversely, is for expenses that will eventually happen at some point. Examples include routine car maintenance, holiday trips or wedding gifts. While these expenses don't occur on a regular basis, they can put a dent in your bank account if you're not prepared.

"By building a sinking fund category into your budget, you can accommodate these expenses without derailing your budget," says Sokunbi.

7. Build an Emergency Fund

We're always told to have an emergency fund for those times life doesn't quite go your way. However, if you have high-interest consumer debt, it can be difficult to decide which to tackle first.  

According to Souffrant, it's best to start with the emergency fund. "At first, you should have a small emergency fund—even a few hundred dollars. That way, if something does come up, you can use that money to pay for it instead of going back into credit card debt."

Once you've established a small emergency fund, Souffrant suggests paying off high-interest-rate debt as quickly as possible. This includes debt like credit card debt, personal loans and car loans. You can tackle this by making a designated line item for debt. With a separate category just for debt, you'll be able to regularly "assign" money toward paying it off.

8. Set Aside Fun Money

Much like healthy eating, the occasional treat does have a place in budgeting. It can even fuel motivation and encouragement as you work toward financial goals.

Sokunbi explains that fun money allows you to treat yourself without the guilt. "It also helps you stay motivated since you won't feel like you're depriving yourself of life's small pleasures," she adds. Those small pleasures can be anything from a movie night to a manicure.

To properly set aside fun money, Sokunbi recommends creating a line item in your budget for treating yourself. Depending on your bigger financial goals, you can allocate a small amount of money to this line item each month. And if you don't spend it? "Roll it over to the next month or put the money toward one of your financial goals," advises Sokunbi.

9. Schedule Budgeting

Budgeting, like all habits, requires time and space to serve its purpose. That's why Souffrant recommends adding budgeting to your calendar, just like you would with appointments and workouts. This helps you stick to your budget while finding time to make necessary adjustments.

Make it fun, too. "Have a glass of wine! Or, if you have a partner, make it a fun budgeting date night where you talk through your goals," suggests Souffrant. You can also choose how often you budget. For instance, budgeting sessions can be done weekly, bi-weekly or monthly. They can also last anywhere from 20 minutes to one hour or more.

Regardless of your approach, Sokunbi recommends viewing each session as a lesson. Take what you learned last month and apply it to the next. Additionally, use every session to understand what's coming up—you'll be surprised at how much easier it will be to follow through.

In the end, keep in mind that budgeting isn't about perfection. "It's about creating a plan, so you can allocate your money according to [your goals]," says Sokunbi. And with time, patience and dedication, you can learn how to control your money—and stop it from controlling you.