3 Tips for Building a Budget You Can Live With

Many people have to work hard to not visibly cringe when they hear the word “budget,” as they conjure up visions of joyless futures lacking in cash for non-essential items, but it doesn’t have to be this way. Budgeting done well makes you happier, more relaxed and more able to focus on non-financial goals and activities.

So what are the keys to doing it well? How can you make a plan that will stick and still let you enjoy a movie and dinner out with friends? These 3 tips will help put you on the right foot for long-term success.

1)      Own your goals: Decide what you need to achieve as well as what you want to accomplish and commit them to paper.

Whether it is paying off a car early, tackling credit card debt or being able to take a trip to Europe, make a list of what you would like your money to do for you in the short term (less than 2 years), mid term (2-5 years) and long-term (over 5 years). These goals are the target that you will aim for as you work through the details of how you will manage your money.


2)      Review reality: With better and better online tools, it is simpler than ever before to get an accurate snapshot of where your money has truly been going. Look at your statements and separate your expenses into two categories, fixed and variable.

Fixed expenses don’t change from one month to the next, such as rent or mortgage payments, car payments or cell phone and cable bills. These predictable costs are the easiest items to account for as you put your budget together.

Variable expenses on the other hand can fluctuate widely from one month to the next. For example your gas, electric or water bill may swing from very low to very high as seasonal temperatures vary. Food, gas for vehicles, medical costs and entertainment expenses can also move from just a few dollars to astronomical heights based on a wide range of factors (especially if you don’t have a budget), so planning for these is much trickier. By looking back at spending from the last few months or up to a year, you can estimate these average monthly expenses and be able to budget effectively.

Couple looking at bills



Smiling young woman holding a credit card and typing on a laptop.

3)      Bite-size budgeting counts: While your goals help you keep track of where you want to go, trying to create a budget for the next 5 years is a recipe for disaster. Start with a short, defined time period of 1-3 months where you actively decide how you will spend your money before you spend it all.

Consider trying a zero-based budget approach, in which you specify where every dollar you earn will be “spent.” With this approach, before the paychecks come in you have already decided what will go to savings, how much is needed for essentials and how much you have left to play with and do the non-essential activities that make life enjoyable.

By deciding in advance how you want to use your money, you increase the likelihood of sticking to it. Being specific in your choices and committing them to paper can also dramatically increase your likelihood of continuing on the path you plan.


The mechanics of budgeting are well within your reach, contact the team at AmeriChoice to help you along the way.

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