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Budgeting isn’t something many people get excited about — I certainly don’t. But as someone who has been writing about personal finance for many years, I’ve come to embrace budgeting as an important and helpful financial habit.
A good budget isn’t meant to be restrictive. Following a budget takes the guesswork out of money management and gives you a clear guide for how to spend the money you earn each month. With the right budget in place, you can comfortably afford the things that are most important to you — whether it’s building an emergency fund, saving for retirement, or finally being able to afford that dream vacation.
If you’re not feeling confident about your budgeting abilities, don’t worry. Here are my best budgeting tips to keep in mind as you get started.
1. Pick a budget style that works for you
There’s no one-size-fits-all approach to budgeting. In fact, there are many types of budgeting styles and strategies to choose from. What’s important is that you choose a strategy that aligns with your money personality.
For instance, if you want to keep things simple, the 50/20/30 rule is a great option. This method breaks up your income into three main buckets — needs, wants, and savings — and leaves you plenty of flexibility regarding how much to allocate toward specific expenses.
If you struggle with debt, the envelope budgeting system is designed to help you control spending by allocating specific amounts of cash into different spending categories, or "envelopes," each month.
Read more: Your complete guide to budgeting for 2025
2. Take advantage of digital budgeting tools
Sure, you could build a budget from scratch using an Excel spreadsheet, but why reinvent the wheel? There are so many budgeting tools out there that can do the heavy lifting for you by organizing your spending into categories, analyzing your spending habits, and offering personalized insights to help you make smarter decisions and manage your money more effectively.
For example, My Money from Yahoo Finance allows you to connect all your financial accounts so that it can automatically categorize your spending. There’s no need to spend hours sifting through bank statements and worrying that you missed something. (Want to give My Money a try? Sign up here.)
3. Set up regular check-ins with yourself
As your financial situation evolves, it’s important to check in and ensure that your budget still works for you. Perhaps you recently received a raise or took out a loan to fund a new business venture. Maybe you’re ready to start a family and want to get a head start on college savings.
When these life changes happen, it’s a good time to sit down and reevaluate your budget. But you should also have regular check-ins to ensure you’re on track. Consider setting up 30 minutes per month in your calendar to review your budget and make tweaks as necessary.
4. Expect the unexpected (and plan for it)
Your budget helps you plan for regular expenses, but what happens if there’s an unexpected bill or financial emergency? That doesn’t have to derail your budget — if you plan for it ahead of time.
Be sure to add a line item specifically for emergency savings to your budget and contribute regularly. That way, you have a financial safety net in place so you don’t have to tap into other budget categories or take on debt to cover a surprise expense.
The exact amount you should have in an emergency fund depends on your income and lifestyle. As a rule of thumb, experts typically suggest maintaining at least six months’ worth of expenses in liquid savings. However, if you’re self-employed or have income that fluctuates month to month, consider aiming for nine to 12 months.
Read more: The 4 best (and worst) places to keep your emergency fund
5. Factor in some fun money
So many people shy away from creating a budget because they feel it restricts their spending. But that doesn’t have to be the case if you factor splurges into your budget.
Designate a line item in your budget specifically for personal spending. When you see that pair of sneakers at the mall or a new video game you’re interested in, you can treat yourself without guilt. Remember, you deserve to spend your hard-earned money on things you enjoy too.
Read more: 5 psychological money hacks to cut spending and increase savings
