How to create an effective budget

If you’ve downloaded or started using a budget after my last post, congrats! But now that you’ve decided to use a budget let me share with you some budget tips to make things easier. I started using a budget shortly after my first or second year of university. I was putting away some money but I never actually sat down to think about what I wanted to do with my money. To make the budget effective you want to think beyond just the numbers. So here are some things to keep in mind while working on your budget to make things easier and more effective.

It’s a budget, not a punishment

Maybe you hate being restricted and that’s why you’ve avoided using a budget. I can understand the feeling as I hate feeling restricted as well. But the reality is a budget actually helps to liberate you by focusing your spending on the right things. Avoid viewing it as a punishment or being restricted and more about spending the time to really focus on you and the things you want to accomplish with your money to improve the quality of your life.

Saving is an expense

I try and save as much of my net income as possible, which in my budget is counted as a monthly expense item. 10% might seem crazy to you (believe me it was when I started) but by being focused and discipline you can get to whatever saving percentage you feel is appropriate to you (more than 10%). You might consider paying bills every month as the same thing as paying yourself and you would be right if the payee name was yours.  Ensure you pay yourself by making saving an expense item/ mandatory bill in your budget.

Detail is key

Everything needs to be accounted for in your budget. A successful budget needs to account for all your expenses and spending. Detail is critical to really understand how you’re spending your money. Gym membership, eating out, buying make up, and other similar small items have to be accounted for. It’s critical to see how your money is being spent to help you change any bad habits you may have.

Display your budget visually as well as a percentage to your relative income

I’m a visual person so my budget is also displayed as a pie chart, which breaks down each expense as a percentage of our household’s income. Let’s say you want to spend $200 eating out per month currently. You input that figure into your budget and you can afford it. Great you think. However, since you also set up a pie chart as well you see $200 spent on eating out works out to be 17% of your total income. Same $200 that’s still workable in your budget but now you’ve been presented that information in a different way. Making good financial decision requires information to be presented in a different way to encourage a change in behavior.

Everything is better with a glass of wine

Okay, so maybe this isn’t really a tip but rather an excuse to drop a wine line. In all seriousness, if you’re in a relationship and trying to do a budget, things can get a little intense. What’s my advice? Have a glass of wine! Doing a budget on your own is hard enough, trying to merge two people’s ideology on money is harder but not impossible.

Relax and be sure to have some fun with it.  This is about both your futures and that should be exciting and not a punishment. Whatever you do, please avoid doing a budget on your own without feedback from your partner. Couples MUST take a collaborative approach to their budget to ensure both are represented in their budget. If you fail to get the buy in from your partner you will find it difficult to reach your goals as your partner will end up becoming an obstacle to your goal as they do not feel represented. Don’t do that, include them as its both your goals and it shouldn’t be only one person’s goal and ambitions.


Hopefully that helps you with creating your budget. But by no means is my list the only things to keep in mind with a budget so feel free to share some of your tips in the comments. Happy budgeting!