How to Create an Effective Monthly Budget

Budgeting- the idea is daunting to many. Not knowing how or where to start can be tough for many household. A successful budget is one that is realistic, based on individuals trends and needs, and has measurable goals at the end of the month. Here are some basic things to consider when looking to create a monthly budget that is effective and achievable.

1. Determine Needs

Look at the bills or things you purchase regularly, and determine what is a need to be accounted for. These typically includes bills such as rent, car payments, phone bills, and some variable costs like groceries and fuel. You first want to see how much you are spending here, and where you have room for improvement via consolidating loans or cancelling the extra cable channels.

2. How Much Do You Make?

Rude to ask- but important to know for your budget. You want to have a concrete number of guaranteed income for the month to begin with. Don’t factor in unknowns or inconsistent income flow, try to be as honest and realistic as possible with how much income you will receive in this time frame.

3. Do Your Research

It’s hard to know how much to spend if you don;t know how much you’re used to spending! Look at trends for the past few months for food, restaurants, clothing, fuel, entertainment etc. You don’t want to slash these budgets without considering what you realistically will need in the future. Set reasonable amounts for each category- This is super easy using! Make these a rolling account too, so you can save up for a fancy outfit or a road trip without tapping into your precious savings account.

4. Fun Allowance

After you’ve determined your needs and trends for variables, you do need to set aside some fun-and some incidental monies. This can be used for going out to celebrate a friend’s birthday- or to replace a printer that just stopped working. Having a fun allowance also gives your budget breathing room so you’re more likely to stick to it.

5. Savings

That precious account- your own savings! When you think of paying your bills, consider your savings account to be another bill and don’t forget to pay yourself! Even just 5-10% of your checks can add up quickly.

6. Planning is essential!

Plan large purchases ahead of time and save money as you go. Most banks or credit unions will let you have multiple accounts- so if you want a new laptop, you can set up to transfer $20 per check to your “laptop” account. Multiple accounts are a great way to stash money for large purchases, weddings, and vacations too.

7. Goals

You want to plan your entire budget- this means not one penny “leftover”. Does this sound counter-intuitive? You bet! But- this doesn’t mean you’re spending every penny you bring it- it simply means it’s allotted for. Money at the end of the budget can be used to pay off debts or save for big purchases, especially like making double payments on auto-loans (institutes such as Colfield Financial have great early pay-off penalty free loans) If you aren’t sure about zero-budgeting or what goals to set up first, check out financial advise websites such as

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