Budgeting tips for a beginner

1. Start macro. Especially with inflation being one of the factors pushing you to spend more thoughtfully, you need to avoid the pitfall of only taking certain expenditures into account. In other words, your budget can't just be about groceries. You need to ask yourself a bunch of questions: are you saving for retirement? Do you have an emergency fund? Are you saving for a house/kids' college/vacations? How aggressively are you paying off your student loans? The cost of milk might feel like the biggest burden in your life, but the real culprit could be $500/month going to debt. Look at the whole picture before you start moving money around.

2. Figure out a purpose. Over the years, it's become clear to me that the most successful spending plans are goal-driven. Whether it's paying off credit cards, saving for a new car, or trying to retire by 50, you need some objective that will keep you in line when spending opportunities pop up. If you're just noticing more money leaving your checking account than normal, that's a great reason to develop a spending plan, but it's still worth setting a couple of goals. If nothing else, look to free up an extra $250 a month to put into your retirement account or stock portfolio. When we know why we're trying to save money, we always do a much better job at it.

3. Try to be realistic. "I'll just eat beans and rice for three months and save a fortune!" is not a good budgeting plan. You want to set yourself up for success, even if that means keeping the bar relatively low. Have you been spending $900 a month on groceries? See if you can get it down to $800. Check out some of the alternative cell service providers to see if you can cut spending there, or focus on driving less and saving on gas. If you do a lot of little things, it will add up without feeling overwhelming. If you try and fail at one big thing, all you've done is sabotage your plan.