Budgeting Do’s and Don’ts

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Budgeting isn’t the most fun activity ever but it’s very important to accomplishing your financial goals. If you don’t have a budget, you’re basically shooting blindly at your future. Trust me, there are better ways to go about it.

I’ve created a list of important do’s and don’ts of budgeting to help guide you through the minefield of budgeting.

Budgeting Do's and Don'ts

Do think of your budget as a plan for your money.

The purpose of creating a budget is to take control of your money, spending, and financial future. The very act of creating a budgeting is a step towards improving your financial situation.

Don’t give up.

If there is a particular area that is frustrating you, re-evaluate your budget and look for areas that need adjustment. Chances are if you’re getting frustrated, something likely needs to change.Do put the time into creating your budget.

Creating a budget takes a bit of work. You need to evaluate your current financial situation, including all your debts, current bills, financial goals, and your current income.

  • Take a look at your current income stream(s) and determine your monthly income.
  • Gather all your bill and debt statements.
  • Determine the amount you can and want to save each month.
  • Set your categories.
  • Determine what your spending limits are for each category.
  • Put it all together to create your budget!

Don’t copy someone else’s budget.

Budgets are very individual things are no one else’s budget will work for you. You need to create your budget yourself.


Do write out your budget.

Writing out your budget helps you to create more definitive categories for your spending and saving plans.


Don’t wing it.

This is the practice of knowing generally how much money you have. It is not a good way to plan financially since you tend to forget about upcoming bills, underestimate bill cost, and often end up failing at your financial goals. This is not having a plan.


Do set financial goals and priorities.

If you’re saving money, make sure you know why: buying a house, saving for emergencies, buying a car, having a baby, college, etc.
Make sure you prioritize your goals, as well. List your goals and order them from most important to least important. Make sure to utilize this list.


Don’t spend more than you make.



Don’t put it on your credit card if you can’t pay with cash.

This is spending more than you make and you don’t want to do that.


Don’t borrow from other categories.

If you’re tempted to do this, it means it’s time to review and update your budget.


Do know your weaknesses.

No one is perfect. We all have weaknesses and areas we need to improve.


Don’t ignore them.

You should acknowledge and address your weaknesses. You’re only halfway there if you acknowledge your weaknesses.


Do update your budget regularly.

Budgets exist to allow you to take control of your money. As your plans and situations change, you need to update your budget.


Don’t “set it and forget it.”

If you don’t update your budget, you might as well not have one. Budgets are meant to be changed, not a one-time task.


Do itemize your budget.

Be sure to create specific subcategories to reduce the chance of failing. For example, include both grocery and dining out categories instead of a single food category.


Don’t exploit loopholes.

If you intentionally create loopholes in your budget, you’re not going to be successful. If you find loopholes in your budget and neglect to close them, you’re not going to be successful.


Do include fun money in your budget.

If your budget does not include some discretionary spending (“fun money”), you’re probably not going to succeed. Budgeting in fun money allows you to still have some positive experiences while budgeting, since budgeting is typically seen as a fun-sucking task.


Don’t be too strict.

Having a budget that is too restrictive will ultimately cause you to fail. In order to be successful, you need to include some wiggle room in your categories. Don’t be vague; just be open to small changes in category amounts or inclusions.


Do include savings in your budget.

Include your savings in your budget to give you a complete and accurate picture of your finances.


Don’t ignore an emergency fund.

Prepare for emergencies by creating a fund for unexpected costs (car repairs, home repairs, etc.). The total of your emergency fund can vary, though typical recommendations are $1000, or 3, 5, 6, 9, or 12 months worth of expenses.


Budgeting Do's and Don'ts Infographic


Closing Thoughts

Budgeting in a highly individualized practice and even though there are a number of guidelines to help improve your budgeting game, always do what works best for you. Budgeting is not one size fits all.

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