Make a Budget with these Easy Tips

Unexpected, but important expenses can happen. In these emergency situations taking out a loan may be necessary, but you should never take out a loan (or run up credit cards) just to cover your normal monthly expenses. If you find yourself in the second situation, it is time to make (and stick to) a budget. Building a budget can seem overwhelming, but it doesn’t have to be just follow these easy tips.

Step 1: Determine Current Spending Habits

Use online budgeting tools* to help calculate how much you make versus how much you spend. It will show you where your money is going so it’ll be easier to see where you are overspending. This tool will also help you to make a new more balanced budget.

 Step 2: Create a Budget

Experts suggest the 50/30/20** rule for your after-tax income to build a healthy budget.

  1. 50% Fixed costs (aka monthly bills): rent or mortgage, utilities, car payment, insurance, etc.
  2. 30% Spending money:  groceries, haircuts, clothing, gas, entertainment, etc.
  3. 20% Savings: retirement fund, emergency fund, etc.

Example: if your take home income is $2,000, your fixed costs should be $1000, savings $400 and spending money $600.

 Step 3: Cut Expenses

Now you have determined what your budget should be it is time to trim the fat and save money. Small expenses add up, so cutting $30 from here and $10 from there will really start to free up cash that can be allocated towards necessary fixed costs and savings. There are hundreds of little ways to save money, you just need to get creative.

 Easy Tips to Save Money and Cut Expenses:

  • Cook and pack your own lunches
  • Brew and bring your coffee to work
  • Save on clothing by buying at the end of the season when the discounts are the highest
  • Always use coupons when shopping at the grocery store
  • Take advantage of money saving apps
  • Fill your tires with air, it’ll save on gas
  • TV subscriptions like Netflix are often cheaper than cable
  • Cancel monthly subscriptions that aren’t worth the money (magazines, “of the month clubs”)
  • Cancel your gym membership and workout for free
  • Look for bundling deals
    • Insurance companies often offer savings when you bundle home, auto and life insurance
    • Communication companies offer deals for bundling cable, internet and phone

 Step 4: Stick to Your Budget

Pay Yourself First: Transfer the money, you have allocated for savings, the day you get paid to a high interest savings account so you are not tempted to spend it.

Auto-withdrawal your Bills: Set up your monthly necessary expenses (like rent, cable, insurance) to be auto-withdrawn from your bank account so you never pay late fees.

Weekly Allowance for Spending Money: A weekly allowance isn’t just for children; it is a great way to keep yourself on track financially. If you are prone to over spending on non-necessary purchases an allowance is a must. At the beginning of the week, go to the bank and withdraw the amount you have budgeted as “spending money”. This is the money you can spend on purchases like groceries, gas, shopping, restaurants etc. Once this cash is gone you’re done! This may be hard to stick to at first, but overtime it will make you more aware of how you spend your disposable income. It’ll also keep you from racking up your credit card with unnecessary purchases and paying ATM fees.


  1. Schwab Money Wise. Monthly Budget Planner
  2. The 50/30/20 Rule of Thumb

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