Best Budgeting Tips

Budgeting can be frustrating, but it’s important to do if you want to organize your finances and avoid overspending. Fortunately, by following experts’ budgeting tips, you can make the process a lot easier.

Listed below are WalletHub’s 12 best budgeting tips, as well as more specialized tips for families, students, project budgeters, vacationers and wedding planners. Finally, we consulted a panel of money management experts to share their favorite budgeting advice.

Check out WalletHub's free budgeting tools!

12 Best Budgeting Tips Overall

1. Have Clear Objectives

You shouldn’t go through the process of budgeting without a purpose. At the very least, you should try to improve your awareness of exactly where your money goes each month so you can avoid overspending. But it’s best to set some long-term goals as well.

Some examples of goals you might want to focus on include:

• Reducing credit card debt
• Saving money for a big expense like a new car
• Building an emergency fund

Understanding your ultimate objective enables you to customize your budget to your specific needs. That in turn increases your odds of success. After all, the goals of your budget will play a role in what type of template you’ll want to use, which expenses you’ll track and, perhaps most importantly, the scope of the changes you will need to make to your daily financial management habits.

2. Establish Realistic Milestones for Meeting Your Objectives

Once you’ve set clear goals for your budget, you can choose metrics for evaluating your progress. This could be saving a certain amount of money over a particular time period, reducing spending in a particular category or getting out of debt within a 0% credit card’s introductory term, for example.

The specifics are up to you, but it’s important to set these sub-goals before starting so your expectations are not tainted by initial results. With that being said, it’s important to keep your goals attainable.

3. List Your Income and Monthly Expenses

One of the first steps in the budgeting process is to gather information on your income and your typical monthly expenses. This will give you initial benchmarks against which to compare future spending, which will allow you to establish realistic performance milestones.

It will also help you determine how you want to group expenses in your budget, as well as the period of time you’ll be budgeting for. We recommend budgeting for a month at a time because it's easy to track against your monthly income.

4. Prioritize Building an Emergency Fund

While discretionary expenses like home renovations, a family vacation or a nicer car might have sparked your interest in making a budget, you should put these on the back burner if you have a lot of debt or little savings. Getting out of debt won’t do you much good if you incur an unaffordable, unexpected expense soon thereafter. So, structure your initial budget around increased monthly savings, with the aim of soon having at least three months’ take-home pay squirreled away in your emergency fund.

5. Prioritize Making Extra Payments on Your Debt

Adjust your budget to continue making the minimum payments on all of your debts except the one with the highest interest rate – to which you’ll pay as much extra as you can afford. After you’ve paid off your most expensive balance, you can repeat this process with the next-most-costly balance until you’re debt free.

After that, you can focus again on saving until you have an emergency fund with at least six-months’ pay. For more debt repayment strategies, check out our guides on the best way to pay off debt and how to stay out of debt.

6. Use the Right Tools

Spreadsheet programs such as Microsoft Excel, Google Sheets or OpenOffice Calc are great for budgeting and are either free or relatively inexpensive. However, they still require you to manually enter information and seek out budgeting templates.

For an easier experience, we recommend using WalletHub Premium. For a low monthly fee, our budgeting tools can automatically sync with your accounts to track your spending and budget progress. You’ll also receive alerts about important changes. If you’re only interested in free tools, you’ll still have access to budgeting with a free WalletHub account, just without the automatic syncing.

For a breakdown of popular budgeting software, check out our articles on how to make a budget and the best free budget templates.

7. Review Your Budget Regularly

Reviewing your income and expenses should be either a weekly or monthly activity that ultimately becomes second nature. Consistency will make things much easier.

Regular updates to adjust for things like changes in your income or financial goals are more manageable than trying to catch up in bulk. Reviewing your budget regularly also makes it easier to identify and stop negative spending trends quickly.

Budget Maintenance Tips

• Schedule a particular time on a particular date or day of the week to perform budget maintenance.
• Set a number of reminders for yourself – online calendar, phone, sticky note, etc. – so you don’t forget.
• Make changes to allocate more or less money to certain expenses as needed.
• As you meet financial goals, you should set new ones and prioritize putting aside money for them.

8. Create Incentives for Sticking to Your Budget

The number of people who make budgets far exceeds the number of folks who stick to and maintain their budgets. Creating an incentive system is one way to retain your interest and promote engagement.

Tips for Creating an Incentive System

• Establish rewards for reaching certain milestones, such as staying within budget for a particular period of time.
• The type of incentive that will work best depends on what you like, but it could range from treating yourself to an ice-cream sundae to finally taking a long-put-off vacation.
• Do a family or group budget project as everyone can keep each other honest and excited.

9. Plan for Income Fluctuation

Planning for the unexpected is essential as far as personal finances are concerned. That’s why we buy insurance and build emergency funds. One thing the Great Recession and the COVID-19 pandemic made abundantly clear is the fact that income levels aren’t always going to stay constant, let alone steadily increase. There’s also always the potential for mass job losses.

As a result, it’s crucial not to:

• Spend as if you will always bring home your current salary (or more).
• Neglect solidifying your financial safety net with a well-funded emergency account.
• Forget to identify areas where you can cut spending when necessary.

10. Always Account for One-Time Expenses

One-time expenses, such as an expensive car repair or a home appliance that needs replacement, can throw a wrench in your financial plans. With this in mind, we recommend creating a budget category specifically for this type of spending. In other words, you dedicate a certain amount of money to be used just for unexpected expenses. You can then list each one-time expense that crops up as a line item within this category – enabling you to track the total cost of these one-offs as well as exactly what you’re buying.

Note that if you’ve built up a sufficient emergency fund and/or regular savings, you may not need to set aside money each month specifically for unexpected things.

11. Try Out Popular Budgeting Strategies

50/30/20 Rule

One of the most popular rules-of-thumb for budgeting is the 50/30/20 rule. It’s recommended that you spend around 50% of your income on essential expenses, no more than 30% on things you want, and at least 20% on savings, investments and paying off debt.

Zero-Based Budgeting

You might also want to try out zero-based budgeting, where you subtract expenses one by one until every dollar of your income is accounted for.

Envelope Budgeting

There’s also envelope budgeting, where you put money into real or virtual envelopes for different categories of purchases. Then, you remove the money from the envelopes any time you have an expense in the relevant categories.

For more options, check out WalletHub’s guide on the best budgeting strategies.

12. Separate Luxuries & Necessities

We all know that luxuries can quickly become necessities, and we all fall into this trap. It’s important to remember and account for that. Unless you’re really struggling financially, it’s healthy to have at least some fun things you want in your budget. But you shouldn’t spend so much that your financial goals get neglected. And if you find yourself spending more on essential expenses during a given month, you should consider cutting back on your luxuries.

You can learn more about what a budget is and how to make a budget here on WalletHub.

Specialized Budgeting Tips

Any budgeter can live by the tenets explained above, but you also may want to budget in other ways, such as planning for a specific expense like a vacation or a wedding, or budgeting collectively as a family. With that in mind, we built on our overall budget tips with advice catered to some of the most popular budget categories.

1. Budgeting Tips for Families
2. Student Budget Tips
3. Project Budget Tips
4. Vacation Budget Tips
5. Wedding Budget Tips
6. Budgeting Tips for Paying Off Debt
7. Tips for Budgeting and Saving Money

Budgeting Tips for Families

1. Categorize Expenses by Family Member: Track which individual is responsible for each expense. This will add clarity and make it easier to tell when people are going over budget. It will also enable you to set personalized goals and incentives.

2. Make It a Group Effort: Including your family in the budgeting process will make it easier to orchestrate actual change. It will also help increase your kids’ financial literacy. In addition, group budgeting lends itself to bonding and incentive-based competition. Framing the budget process as a game will certainly help get the kids on board.

3. Don’t Forget Your Pets: If you have pets, it’s important to remember that they carry their own costs. From food and grooming to medication and pet insurance, you’ll need to incorporate these expenses into your plans.

4. Don’t Let Your Budget Kill the Vibe: Your family budget is not the end all and be all. It’s important to avoid overspending, but you should also always try to include some fun activities together.

5. Plan Meals Together: Planning out your meals ahead of time can help you shop smarter and avoid impulse purchases. You can also plan several meals with similar ingredients and buy in bulk to save money.

6. Make Kids Authorized Users: You can make your children authorized users on your credit cards. Not only does this help them build credit, but you can also teach them to spend responsibly. Some cards may let you set personalized spending limits for each user.

7. Practice Loud Budgeting: There’s an online trend called “loud budgeting” which basically encourages you to be open about your budget and how much you’re willing to spend with others. It also includes saying no to expenses that don’t fit in your budget, and being clear about why you’re refusing. Practicing loud budgeting with your family can help set financial boundaries and improve planning.

Student Budget Tips

1. Cook for Yourself: College meal plans can be big money wasters, especially if you don’t take advantage of the full number of swipes/dining dollars you have. Buying groceries and cooking meals for yourself can save you a lot of cash.

2. Start Paying Student Loans ASAP: While you aren’t required to begin making student loan payments until 6-9 months after graduation, it’s best to begin accounting for your future payments and building up some savings specifically earmarked for this purpose. Beginning to actually make payments while in school will also enable you to save on interest. Of course, minimizing the amount you borrow in the first place is important, too.

3. Work Part Time: While homework and studying can certainly keep you busy, it’s likely you have time for at least a small amount of work every week. Many colleges hire students to work on campus, so getting that small boost in your income can help expand your budget.

4. Take Advantage of Student Discounts: Many businesses will give you a small discount just for being a student. Use that to your advantage when planning your shopping and activities, as it can help your budget stretch a little further.

5. Use Student Health Services: Some colleges offer free or low-cost health services. Use these for routine check-ups, mental health support, or vaccinations instead of visiting off-campus providers.

Project Budget Tips

1. Determine if the Project Will Increase Your Property Value: If the project you’re planning to undertake involves work on your home, make sure to do some research into how the changes would affect your property value. If the work would actually reduce the value, this is an important cost to take into account. What’s more, look into whether allocating your funds elsewhere would provide a bigger equity boost.

2. Consider All Potential Costs: Project budget templates tend to be far vaguer than standard monthly budgets, or even templates for groups like students and wedding planners. This allows them to work for a wide range of projects, but it also adds to the budgeter’s burden. You’ll have to think up all of the different things you’ll need to buy, trying as best you can to research potential expenses that could creep up on you.

It’s also important to note that building materials can vary widely in cost, often depending on the quantity you buy. Getting the best deal on materials is important, and it requires you to plan thoroughly.

3. Work Efficiently: If you have to rent a truck or other equipment, or you’ll only have help for a certain period of time, it’s important that you schedule things in a manner that enables you to maximize the amount that you get done. This will likely entail scheduling rentals for overlapping times and/or taking off work one Friday to have a whole long weekend at your disposal.

4. Practice Good Maintenance: If you keep things in your home well-maintained, you may avoid the need for certain home improvement projects or push them back many years. In other words, spending a little bit of money and time now can save you a bunch later.

5. Get Multiple Quotes: Part of good budgeting includes making sure you’re getting the best price for any contractors you hire, and the best way to do that is to get quotes from multiple companies. Just make sure to only do this with companies that offer free estimates, as some may charge you just to come out.

Vacation Budget Tips

1. Pick the Right Destination & Calendar Date: There are numerous ways to take the same type of vacation. For example, a trip to the beach could entail a road trip or an international flight, and a European vacation could be done out of either a backpack or a five-star hotel. So, avoid getting hung up on going to a particular place at a particular time.

Instead, focus on finding ways to get what you want at the cheapest possible price point. This might, for instance, might be going to a less popular destination with the potential to be a hidden gem. Or, you might want to allocate more of your budget to transportation at the expense of lodging. Traveling outside of peak dates is another simple way to save, but you should be sure to check the weather before booking.

2. Use a Rewards Credit Card: A credit card is a traveler’s best friend. Not only does it provide a blanket $0 liability guarantee – meaning you’ll never have to pay for unauthorized charges – but it also reduces your susceptibility to pick pockets.

For overseas travel, Visa and Mastercard offer the widest acceptance, and many cards have no foreign transaction fee, which can save you a ton of money. Many credit cards also offer lucrative rewards or 0% financing rates that can help greatly lower the cost of a particular trip.

We also recommend getting a Visa or Mastercard debit card with low international ATM withdrawal fees as your primary means of accessing cash abroad.

3. Take Advantage of Initial Bonuses: Many credit cards offer initial rewards bonuses worth hundreds of dollars to new applicants who spend a certain amount of money in the first few months. An extra $400 could certainly alter the affordability of your trip, or even enable you to upgrade your accommodations.

Travel expenses also represent a good way to meet the initial spending requirement needed to qualify for an initial bonus, though you must be able to pay off your balance in a timely manner. You can learn more about the best credit card signup bonuses here on WalletHub.

4. Consider a House Instead of a Hotel: For larger groups, especially those comfortable with a couple of people sleeping on couches, can lock in some significant savings by forgoing hotel rooms in favor of a rented house. Brokers such as Airbnb, VRBO and HomeAway have houses and condos with a range of sleeping capacities available in most major U.S. cities.

5. Don’t Go Into Debt for a Vacation: It’s simply not worth indebting yourself for a vacation. Period. There are just too many low-cost, even free, ways to have fun and let off steam to warrant compromising your financial security for a trip. There is, however, one notable exception to this rule: if you are paying for the trip with a 0% credit card and are able to pay off the full balance before the introductory period ends.

6. Take a Staycation: If you simply can’t afford to go somewhere this year, make the best of things with a festive staycation. There are probably plenty of great places local to you that you’ve never experienced. You can also check out our guide on the best cities for staycations.

Wedding Budget Tips

1. Limit the Number of Guests You Invite: The size of your wedding will have a significant impact on your budget. The more people you have, the more chairs, tables, centerpieces, and food you will need to pay for. While the bride, groom and their respective parents will have lots of people they want to invite, cutting the guest list down can be one of the easiest ways to save on a wedding.

2. Avoid Common Budget Busters: One of the biggest ways to save money is to avoid common budget-busters like wedding planners, live bands, top-shelf booze and peak event dates (e.g. Friday, Saturdays and holidays). They all have low-cost alternatives that make relatively little practical difference to event goers.

3. Include the Honeymoon: While you budget for your wedding, you should be simultaneously budgeting for your honeymoon. This may even help you cut back on wedding expenses when you realize how much further the money can go during a two-person trip rather than one day of festivities. Also, you may be able to save more for the honeymoon if you wait to have it a couple of months after your wedding.

4. Don’t Count on Gifts: You will, of course, get gifts from those who attend your wedding. You should not, however, count on the cash you may receive to help pay for the cost of your wedding. For one thing, you don’t know how much you’ll get. And, besides, gifts should be gifts – the icing on the proverbial cake, not the batter.

5. Make a Gift Card Wish List: Opting for a gift card wish list rather than a traditional registry gives you a great deal of flexibility, as you’ll be identifying your favorite stores rather than particular items. This enables you to pool gift cards from the same retailer to buy big-ticket items that would be inappropriate on a standard registry. It also lets you wait to take advantage of stores’ sales, and it positions you to more easily liquidate your gifts if you would rather have cash.

6. Avoid Debt: While it’s understandable to want your wedding to be as magical as possible, going into debt for the occasion is a bad idea. Just think, do you really want to be starting off your marriage still owing money for a one-day party, or would you rather have your first debt together be a mortgage?

7. Use Digital Invitations: Wedding stationary is very pricey. Handling the invite, RSVP and thank-you process via email or social media can save you a lot of money. It all comes down to your priorities and how traditional you and your family are.

8. Steer Clear of Fridays & Saturdays: Much like traveling during the offseason, scheduling your wedding for a low-traffic day of the week will save you a considerable amount of money, on everything from the reception space and caterer to the DJ and limo.

9. Get Married in the Right Place: Holding your wedding in one of the best cities to get married can save you and your guests a lot of money. These places are affordable, with an abundance of wedding vendors. That helps you get more competitive prices and more flexibility picking dates.

Budgeting Tips for Paying Off Debt

1. Use the Avalanche Approach: Each month, pay as much as possible on the debt that has the highest interest rate, while making minimum payments on your other balances. Once you’ve fully paid off the debt with the highest rate, move on to the next-highest. This strategy gets you out of debt the fastest because it minimizes the amount of interest that accrues.

2. Set Up Automatic Payments: Setting up automatic payments for your debts ensures that you’ll never be late. You can also typically set a specific dollar amount to pay, based on what you determined when making your budget. Paying a consistent amount of money automatically every month can help eliminate the temptation to pay only the minimum due, which might arise if you’re making manual payments.

3. Cut Luxuries and Apply the Money to Debt Payments: If you’re spending a lot of money on unnecessary purchases each month and you still have a significant amount of debt, consider going without those luxuries for a few months. Put the money you would have spent toward your debt instead to get yourself into a better financial position.

4. Make Extra Payments: Most creditors allow you to make extra payments on your debts whenever you want without penalty. If you get some windfall cash or don’t end up spending as much as you anticipated on other categories in your budget, consider making an extra payment on your debt.

5. Consolidate Debts: You can combine multiple high-interest debts together into one balance with a lower interest rate, using a balance transfer credit card or debt consolidation loan. Not only does this allow you to save money, but it helps your budget in a secondary way by consolidating multiple payments into a single monthly payment, which is easier to keep track of.

Tips for Budgeting and Saving Money

1. Build an Emergency Fund First: Even the best laid budget plans can fall apart due to unexpected expenses like a car accident, hospital visit, home repair, etc. You should have an emergency fund whose only purpose is to cover unexpected expenses or pay for your normal monthly expenses in case you lose your source of income. Set aside money every month until you have at least six months’ worth of your monthly expenses saved.

2. Maximize Your Savings: If you have an emergency fund prepared and are simply building your regular savings, take advantage of accounts with high interest rates. For example, consider putting some of your savings in a CD. You won’t be able to take the money out for a while without a penalty, but you’ll earn significantly more interest. Your emergency fund should be able to cover anything you need while the CD money is inaccessible.

There are also high yield savings accounts that are less restrictive about when you can take your money out, but they may limit monthly withdrawals and require a minimum balance.

3. Don’t Neglect Investments: The earlier you start preparing for retirement, the better. Budgeting even a small amount of money each month to put into a retirement account or other brokerage account can make a huge difference in the long run. If you want to avoid the hassle of managing stocks yourself, consider investing in mutual funds or exchange-traded funds that give a diversified sample of the market.

4. Don’t Spend Your Extra Money: During a given month, you may receive extra money, such as a work bonus, gift, or tax refund. It may be tempting to spend the money on something frivolous, since you hadn’t planned on having it in the first place. But you can benefit a lot more in the future by putting it toward savings instead.

5. Take Advantage of Employer Benefits: If your employer matches a certain amount of contributions to your retirement account, make sure to take advantage of that and maximize the amount you set aside. You’re essentially doubling that money for free, which can add a ton of extra value to your account by the time you retire.

Ask the Experts: Best Budgeting Tips

For further insight on the budgeting process, we asked a panel of budget professionals to share the best budgeting advice they’ve ever received, as well as their thoughts on a few other budgeting topics. You can check out their bios and responses to the following questions below.

1. What’s the best budget tip you’ve ever received?
2. What advice do you have for budget problem solving?
3. What is the biggest budgeting mistake people make?
4. What tips do you have for minimizing the impact of inflation on your budget?