How Do I Get Good at Budgeting

1. Distribution. For myself and the clients I advise, I start with a simple budgeting breakdown: 70/10/10/10. That's 70% of earnings to cover monthly expenses, 10% toward investments, 10% to savings, and 10% to tithing or charity. Personally, I don't need more detail in my budget—if I stay committed to each of the 10% categories, the 70% is taken care of. The hard part is not cutting into your savings or investing money because you had a few too many steak dinners in a given month. Whatever parameters you set, you have to keep yourself in line or your whole budget falls apart.

2. Dealing with debt. A lot of people claim they can't budget because they have more student loan or credit card debt than they know what to do with. While outstanding balances and interest payments make money management tricky, they also make a solid budget that much more important. After you set aside money for necessities like rent and groceries, see how aggressively you can attack that debt. Each payment drives down the principal, saves money on interest, and gets you closer to freedom. If you try to create a budget that ignores the $10K balance on your Visa, the entire system is destined to fail. Make debt repayment a cornerstone of your plan and get that monkey off your back.

3. Be honest with yourself. The most common reason I see for a failed budget is when people are too hopeful and not realistic. You have to budget within your means and acknowledge the areas where you have spending problems. Personally, I love buying things for other people. In the past, I've had to fight that urge when times were tough. If there's a type of spending you're prone to, see if you can cut back for a bit while you get things in order. You don't have to change your habits forever, just long enough to get settled with a budget. If you pretend you don't have a shopping problem while dropping $500 on non-essentials from Amazon every month, all your efforts are in vain.