Tips and Tools to Create a Practical Personal Budget

May 7th 2016

Keep Budgeting Simple

A personal budget does not have to be an overwhelming spreadsheet that is so detailed it becomes confusing and difficult to follow. Budget-minded individuals should keep the process simple by categorizing areas of spending without micromanaging the budget. For example, lump groceries and restaurant expenses together as a food category and combine automotive maintenance expenses with fuel costs. People should avoid breaking down too many categories to eliminate the risk of giving up on a personal budget because it is too tedious or time-consuming.

Determine Expenses and Income

Individuals attempting to create a personal budget should first make a list of their expenses and debt. Monthly payments for rent or a mortgage, insurance costs, vehicle payments and child support or alimony payments are typically at the top of the priority list. Additional debt such as credit card payments, school expenses, household supplies and miscellaneous expenses should be included under a secondary category.

A personal budget should also outline an average income. People with salaries that vary based on hours worked or overtime can estimate a low dollar amount to ensure they are not over-budgeting income. Any excess funds can be applied to debt or reserved for savings. Personal budgets are much more realistic and easier to stick to when a base income is determined at the beginning of the process.

Set Time Periods

A personal budget is only successful if individuals commit to sticking to the plan. It may help to establish a time period to evaluate the effectiveness or realistic nature of the personal budget. For example, changing the budget each month can be tiresome and ineffective. Individuals should set a personal budget and evaluate the results over a three- to six-month period and then make changes accordingly. Month-to-month expenses can change over time, so it is helpful to re-evaluate the budget periodically and make changes to expenses or income.


A personal budget is not meant to be used as a punishment for overspending. Although personal budgets can help people curb their spending habits and save money, outlining a financial plan is a beneficial task for individuals regardless of their financial status. A personal budget helps people create a plan for the future that safeguards income and eliminates wasteful or unnecessary spending. Preparing a budget can also be an eye-opening experience when individuals are not keenly aware of how their money is spent on a regular basis. People can create personal budgets easily and learn how to keep spending on track with tips and tools designed to save hard-earned funds.

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