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How to Create a Budget and Stick With It

Strategic budgeting and saving can help you take control of your future and feel confident in your everyday financial decisions. But even when people see the merit, many are left wondering how to make a budget or how to stick to a budget. To help you create a plan that works for your lifestyle, we’ve outlined some tips for creating a budget.

Couple with a laptop and calculator and a sheet of paper

Set Goals

Your budget will be easier to stick to if you’re excited about what you’re working toward, and you can see your progress. Some examples of common budget goals are:
  • Pay off debt
  • Create a college account
  • Save for a trip
  • Contribute to an IRA or a Roth IRA
  • Save for a down payment on a house
You may want to write down your goals or include them in each monthly iteration of your budget, so you can remember why you’re being so diligent.

Gather the Facts

A foundational step in setting your budget is to know where your money is currently going. Assemble your financial information from the last couple of months. This information should include:
  • Pay stubs
  • Mortgage or rent statements
  • Utility bills
  • Credit card bills
  • Receipts
Take your monthly income and subtract your monthly expenses. If the expenses add up to more than your income, examine where you could cut down. If the expenses are less than the income, look for opportunities to enhance your savings. If your income varies from month to month, make your calculations based on a low-earning month.

Decide What Sort of Budgeting System You Like

There are many different organizational systems to help you figure out how to make a budget, and selecting the one that you find easiest or most enjoyable can help you figure out how to stick to a budget.


Within this system, you dedicate 50% of your after-tax monthly income to needs, 30% to wants, and 20% to debt repayment or savings. Your designation of individual needs or wants may be
judgment calls. For example, groceries for simple everyday meals might be considered needs, but fancy upgrades to those groceries could be considered wants.
In general, your needs include items like mortgage or rent payments, food, transportation expenses, utilities, insurance and child care. Wants encompass expenses like streaming subscriptions, meals out, travel and entertainment. How you distribute the remaining 20% will depend on your current needs. If you have high-interest debt, you’ll want to pay that down as quickly as possible. If you have paid down toxic debt but haven’t saved an emergency fund of three months’ worth of necessary expenses, you could begin that fund. If you’ve done both those things, you should grow your retirement accounts.

Envelope System

The envelope system gives you real visual and physical feedback as you’re figuring out how to stick to a budget. Divvy up your monthly income (excluding mortgage or rent payment) into cash in envelopes and assign each envelope an expense category. Examples of categories include:
  • Groceries
  • Gas
  • Personal grooming
  • Utilities
  • Entertainment
  • Car maintenance
  • Gifts
  • Restaurants
  • Personal
Under this system, you only spend the cash in the envelopes. This discipline helps you avoid overspending in certain areas — like eating out.

Budgeting App

Apps can help you understand how to make a budget, and when the numbers are on your phone and with you wherever you go, it’s easy to understand how much you can spend in any situation. Budgeting apps that might work for you are:
  • YNAB (You Need a Budget)
  • Mint: Budget Tracker & Planner
  • Dollarbird
If you’re wondering how to stick to a budget, this type of real-time feedback can be as helpful as it is practical. If you're having trouble with your budget, read more about how to find the budget that works best for you. 

Celebrate Your Successes

Some people find it difficult to stick to a budget long-term, which is why it’s important to celebrate when you reach your goals — big or small. Treat yourself to a small gift, have a dance party, take a day off from work and relax. Honor your achievements so you can keep going.
At First National Bank and Trust, we have many resources to help you budget and save. And if you want to test your knowledge, you can take our Budgeting Basics Quiz. If you’d like to talk about what sort of accounts can help you maximize your savings, you could call us or stop by your local branch and speak to one of our many helpful associates.