When you hear the word ‘budget,’ you might conjure a picture of living on ramen noodles to save every possible penny without any time for fun. That can turn anyone off the idea of creating a budget.
Luckily, this doesn’t have to be the case. It is entirely possible to build a budget without depriving yourself.
Why I built a budget that didn’t leave me feeling deprived
Back in 2017, I was a recent college graduate that had the good luck of landing a job in my field of conservation biology. The job was definitely interesting. But I was only making $25,000.
Of course, it was completely possible to survive on $25,000 where I was living in Gainesville, Florida. However, I knew that I’d need to be careful with my pennies to leave room for any kind of extra wiggle room for adventures.
That’s when I choose to get serious about my personal finances. I decided to create a budget that would allow me to cover my expenses and leave room for adventures.
Unfortunately, I still didn’t really have too much leftover to set aside for my long-term money plans (like buying my first house and retiring early). With that pressing reality, I set out on a side hustle path that completely transformed my financial future. Now, I could take about the amazing benefits of a side hustle all day long. But let’s get back to budgeting!
How to build a budget without depriving yourself
Here are my top tips to help you build a budget without depriving yourself. After all, personal finances should support your adventures – not force you to live a life without enjoyment.
Start by tracking your expenses
When you start the process of building a budget, you’ll need to start by tracking your expenses. Without a better understanding of where your money is going, you won’t be able to construct a budget effectively.
As you start to track your expenses, consider the budgeting categories that fit into your life. A few standard categories might include grocery spending, dining out, gas, and entertainment. But you’ll likely have some specialized categories depending on your lifestyle such as pet expenses, travel, and particular hobbies.
There are a couple of ways to track your expenses:
- Ye old pen and paper. You can go about tracking your budget the old fashioned way. Simply write down each of your expenses and categorize them appropriately.
- Spreadsheet style. Tracking your expenses in a spreadsheet can be time-consuming but it is an effective way to see the overall picture. Personally, I use a Google sheet to track my monthly expenses.
- Snazzy apps. The easiest way to track your expenses is with the help of an app like Mint. Once you link up your accounts, Mint will automatically pull your expenditures into the correct categories. If you are looking for a low maintenance solution, Mint offers the perfect fit. Plus, you can use Mint for free!
I would recommend tracking your expenses for at least a month or two before you start making adjustments. Otherwise, it can be difficult to see the full picture.
Be prepared for surprises
Once you start tracking expenses, be prepared for the surprises that pop up! You might find that you are spending way more than you thought in particular areas.
For example, I discovered that I was definitely overspending on takeout. But without tracking my expenses, it was difficult to see how much those dinners out were really costing me each month.
Cut the obvious
Once you have a better picture of your monthly expenses, you’ll likely find some glaringly obvious places to cut your spending.
In my case, I discovered that I was really overspending on takeout. With that, I had to make some big changes to my habits. But I was able to save hundreds of dollars each month.
Take a look to see where you could cut things out of your spending. The key is to look for things that you won’t miss too much. Consider impulse purchases and any large categories as opportunities to cut back. For example, you might be able to start.
Get creative and find hidden savings on basics
After cutting back on obvious, you should take another look at your standard expenses.
Many expenses seem untouchable. For instance, how could you stop spending so much on rent or car insurance? You can’t really cut either of these expenses out of your life completely. But what if you could bring down these costs? Here are some strategies to do just that.
- Comparison shop for big expenses. You should shop around each year for any insurance purchases. You might be able to save a surprising amount by simply switching providers. Check out Policygenuis as a quick way to compare the best rates.
- Try house hacking. The goal of house hacking is to reduce your housing expense. In most scenarios, you would purchase a property and use the rental income from tenants to cover your mortgage payment. If you are intrigued by the idea of eliminating your housing expense, then I highly recommend checking out the House Hacking podcast to learn more.
- Negotiate your bills – or take the shortcut with Trim. You can likely find savings in your household bills and subscriptions, such as your internet bill, by taking the time to negotiate with your provider. Although this can be an uncomfortable conversation, it is a good way to cut costs. If you don’t want to make the call, then consider enlisting the help of Trim. Their experts can do the legwork, and you’ll split the savings.
As you look for ways to tighten your budget, don’t be afraid to get creative.
Make room for what matters to you — and make adjustments along the way
Let’s not forget – building a budget without taking away what really matters is key to long-term success. If you don’t consider what is important to you in your budget, then it is very likely you’ll fall off the budgeting train altogether in favor of spending on what brings you joy. Take some time to consider what really matters to you.
At this point, I make it a priority to leave room in my budget to take care of my puppy, travel whenever I can, visit family, and read books to my heart’s content. But I also have big savings goals for my financial future to balance with my short-term spending desires.
You may have other areas that you want to spend money on, such as a meaningful hobby or adventures to far-flung destinations. You should absolutely leave room in the budget to spend on these things that matter to you. But don’t forget to include your long-term savings goals in your budgeting.
Of course, this doesn’t mean you shouldn’t look for savings as you spend on your favorite things. Personally, I still maximize my travel rewards to lower my overall travel costs without sacrificing comfortable travel.
The bottom line
Although a budget may feel constrictive, it can be an important tool to help manage your money. Take some time to consider your budget and your long-term plans to strike a balance that works for you.
