5 Steps to a Budget That Lasts

Part of America’s aversion to budgeting may be rooted in language. The word “budget” – much like the word “diet” – has negative connotations. Budgets and diets are viewed as restrictive reminders of things we cannot have. This is linguistic nonsense. A budget and a diet are both tools. If the tools are used properly, they lead to a desired outcome.
— Investopedia Staff

Now, I’m not the first person to compile a guide to budgeting, and my goal is not to claim that I hold the only keys to a successful budget. I only seek to provide a concise, actionable way to implement a meaningful budget that lasts.

This is an issue that is near and dear to my heart. After all, my collegiate thesis was titled “Why Everyone Needs a Budget” (boring title, I know).

Getting Started

For many, this part is the hardest obstacle.  An object at rest is much more difficult to get moving than an object already in motion.  Likewise, a budget becomes easier to manage the more it is used; the real pain can be just starting. It helps to have a process to follow.


1. Know your income

You should be able to answer the following questions:

  • Do you get paid?
  • How much after taxes?
  • How often?
  • Is it consistent?
  • Is it reliable?

Knowing the amount, frequency, consistency, and reliability of your income can give you a much better picture of how you should approach budgeting. Those who get paid less frequently may need to budget months in advance, rather than monthly. Those with inconsistent income may need to figure out a conservative base amount to base their budgets on. Those with unreliable income may need to build in some extra cushion in their budgets.

Regardless of your income situation, a budget ensures your spending stays below your means.

2. Know your expenses  

The second stage of the process is knowing where that income tends to go. I will present two ways of doing this:

The first way is to use pencil and paper or excel to track all of your expenses for a month to two months by recording and categorizing every purchase. This is very effective and highly customizable, but can also be very hard for someone who is new to the discipline of budgeting. 

The second way would be to use software. Software can be a powerful ally in the budgeting process. Technology such as Mint (from the makers of Turbotax) can help you make the process of tracking your expenses a little easier. Mint can take your spending information from your credit and debit cards and generate a tidy pie chart to give you a glimpse into where your money has been going. 

Even just getting though this step can make a huge impact. Seeing your spending habits laid out in front of you can help you quickly identify problem spending areas. Sometimes just regularly monitoring your expenses can keep you on the right track.

3. Make a list of your values and Goals


This step may seem like the equivalent of reading a prologue at the beginning of a long novel, but this is the difference in having a budget that is effective, and one that is meaningful.

What's important to you? If someone looked at your spending, could they tell? Maybe you value your faith or certain causes, but not a red cent of your spending goes towards those values. Billy Graham once said, "Give me five minutes with a person’s checkbook, and I will tell you where their heart is."

A budget that isn’t tied to specific, worthwhile goals is like loading cargo on a freight train without any idea where the train is supposed to go.  If a budget doesn’t help you meet your goals, then what utility does it really provide?  A plan that ignores intermediate and long-term goals is foolishly short-sighted, and in the same way, one that ignores short-term obligations and goals is destined to fail.  Goals provide the framework for your budget to last and provide you with the motivation to keep at it.

4. Make a Plan

This is where it all comes together.  Your income, expenses, values, and goals should all be used in unison to create a budget that is truly tailored to you. 

Looking for an app to use for your budgeting?  I could come out here and say that this app is better, or that app is better, but frankly, the best budgeting method is one that you’ll use.  

I don’t care if it’s pencil and paper, an Excel spreadsheet, or even some kind of envelope system, whatever motivates you to consistently track and control your spending is what I recommend. There are multitudes of free apps and resources out there to try, and I would encourage you to try several before landing on one that fits you.

Mint is a great resource, but I actually only use it to track my expenses, and not for my family's actual budget. Mint is so easy it can actually tempt you to forget about it and just watch your money spend itself. I wanted something more interactive and proactive. I use an app called You Need a Budget (YNAB). It's something I've used since college and love it so much that I'm willing to pay for it.

My advice is if you find a free app out there (and there are plenty of them) that you like and that works for you, use it!  Find something that you like, implement it, and keep up with it.  Don’t make the search for software into a “search for the perfect budgeting technology.”  The perfect piece of budgeting software doesn’t exist, and a prolonged “software dating” window will only hinder your progress, not help it.

5. Adjust and Reevaluate

The best advice I can give is this: Don't give up. Your budget will fit you better as time goes on. You'll add categories you forgot, combine categories, adjust your spending, etc. The important thing is to stick with it. You'll be amazed how far you'll come if you just keep at it.

Happy budgeting and feel free to shoot me a message if you have any questions!