8 Effective Ways of Better Budgeting of Your Finance

8 Effective Ways of Better Budgeting of Your Finance

No matter which stage of life you are currently at, it is always good to educate yourself about personal finance. You can be a student, someone who has just started his/her professional career, or an experienced professional – how you manage your finances can significantly impact your lifestyle. That is where budgeting plays a crucial role.

A budget is a strategy for the way you choose to spend your money. If you are spending your money without any planning, it can be difficult for you to save and maintain your wealth. This is why I have assembled a few useful tips that will help you budget your expenses more effectively and spend your money wisely.

  1. Track your expenses while you prepare your budget:

Before you plan your budget, it is important to know where your money has been going. So, track your expenses for at least a couple of weeks or a month to see the parent. You should also consider making your payments through debit cards and clear all the pending bills. You can simply generate the bank statements to see what you have spent.

  1. Start with a simple budget on paper:

If this is the first time you are preparing a budget, it is better to use pen and paper for it. There is no need to look for fancy apps or tools in the beginning. Just note down what you like to spend where. Once you get the hang of the budgeting process, you can move to the digital alternatives or pen and paper. Use MS Excel or other budgeting tools to take your budgeting to the next level.

  1. List all your sources of income:

If you have a stable job where you get a regular salary, then this step will not take much of your time. However, if you do multiple jobs, freelancing, and earn money from your investments, you need to add up all income and write the number at the top of your budget sheet. Also, do not forget to add the incentives, overtime pays, and other incomes from your side hustle.

  1. List all your expenses:

While listing all the areas where you are willing to spend your money, you should make sure that every dollar you have goes to a designated place. If you don’t do it, the unallocated money will get blown in some other area. Be very particular about all your money, so that your money works for you.

At first, you need to list all your regular, fixed expenses. Gather all your regular bills, including the car payments, public transportation pass, mortgage or rent payment, health insurance premium, utilities, internet bill, mobile bill, and others. Here is a checklist of common fixed expenses for your reference.

  • Tithing
  • Charitable giving
  • Rent or mortgage
  • Renters insurance
  • Homeowners insurance and property taxes
  • Car payment
  • Automobile insurance
  • Life insurance
  • Health insurance
  • Internet
  • Cell phones
  • Dental insurance
  • Cable/satellite TV
  • Home phone
  • Gym membership
  • Retirement savings

Next, you need to list all the variable expenses you have. The variable expenses are those which change depending on your needs. To help you identify this type of expenses, let’s give you a checklist of common variable expenses:

  • Groceries
  • Household items (cleaners, towels, and related items)
  • Eating out
  • Gasoline/fuel
  • Public transportation
  • Clothing
  • Utilities
  • Toiletries, makeup, and related items
  • Child care
  • Pet food and supplies
  • House maintenance
  • Home furnishings and appliances
  • Car maintenance
  • Education/tuition
  • Kids’ school expenses
  • Entertainment
  • Electronics/toys
  • Recreation/sports and vacations
  • Haircare (stylist/barber)
  • Christmas and gift-giving
  1. Decide what amount of money you will budget towards savings:

In the first few months of budgeting, you may not have a lot of money left to put into your savings. But that is okay. Start saving whatever money you have left after budgeting your expenses. Start increasing that amount by reducing your unnecessary expenses or by getting more income after you get familiar with your budget.

Instead of imagining an unrealistic number for your monthly savings, try to determine an achievable amount for savings. It will be wiser to save that amount of your income before you spend the money on any expense. This practice will help you save more.

  1. Separate an amount of money for an emergency fund:

While you start to budget your savings, you should save for the emergency fund. This is an important step as such a fund frees you from relying on credit cards and actually prevents emergencies from happening. It is recommended to put all the extra money that you have saved after all the essential expenses in this emergency fund until it is fully funded.

Building an emergency fund is not a difficult thing to do. However, you need to keep putting in a certain amount of money every month into the fund. If you or one of your loved ones are in need of medical attention or there is a natural disaster such as flood, tornado or tsunami, your emergency fund will help you handle those challenges with confidence.

  1. Start working on paying off your debts:

You can use a portion of your emergency money every month to start paying off your debts. Once you start budgeting and have all the expenses noted, you will start to see all areas where you can reduce the expenses in order to pay off your debt little by little. After you get a better understanding of the budget, you should try to set up your budget in a way that you can pay some extra on the debt payment.

It is always better to pay off your debt as soon as possible if you have the option. You should also look for ways to increase your income or find things to sell in order to reach the goal.

  1. Adjust your budget categories in case of overspending:

Even if you follow your budget and spend your money accordingly, there will be times when you will be forced to spend more than what you have planned for in a certain category. In such cases, you will have to pull money from other spending categories.

Don’t reduce the budget from your regular, fixed expenses. Try to adjust your budget from the categories which are not considered essential. For instance, you can cut down on the eating out part or the Netflix subscription for a month. If you plan for such scenarios from the beginning, you will have no problem managing your personal finance.


As mentioned earlier, you can start working on your budget at any point in life. The earlier you start, the better as it helps you get better at managing your finances. So, start following these tips to prepare your budget and start saving for a better future.

Author bio: Olaila Lee is a content writer for MyAssignmenthelp.com, a renowned global homework help and  assignment writing service. Despite passing college with chemistry majors, she knew her calling lay elsewhere. He now spends his days conjuring articles and blogs for the USA’s biggest assignment help service.

Hi, I'm Raj Hirvate and I am a Tech Blogger from India. I like to post about technology and product reviews to the readers of my blog. Apart from blogging i'm a big Anime fan I Love Watching Naruto, One piece and Death Note.