How to create a budget you’ll actually stick to

There’s often a taboo around talking about money — and telling someone about your budget is no exception. It might be one of the most uncomfortable conversations, and the connotation that you’re pinching pennies to pay the bills can feel downright embarrassing.

Budgeting doesn’t mean you’re broke, though: In fact, financial educator Alexis Howard — who runs a popular personal finance TikTok account in addition to her full-time job as a wealth advisor for a private wealth management firm — said setting a budget is key at any income level.

“Whether you’re making $100,000 dollars a year or $250,000 a year, if you’re making what you spend, you still net zero,” Howard said. “I think people really get caught up into increasing income and making as much money as you can, but even if that’s a million dollars a year and a million dollars is going to be spent on luxury clothing, then it doesn’t really matter.”

Having a clear understanding of what you can and can’t afford to spend is key to creating a healthy financial future, so Howard said she focuses more on the behavioral side of budgeting — in other words, the day-to-day routine of sticking to your budget. If you’re just starting your budgeting journey, keep reading — Howard has some really helpful tips for creating and committing to a spending plan.

Before you start creating your budget, get a good sense of your starting point. Howard recommended starting from your paycheck, then looking at your bank and credit card statements to tally up exactly how much you’re spending each month.

She formulates her budget by dividing her spending into two categories: essential and non-essential. “Essential items would be things like bills, groceries, gas, public transportation, anything that’s related to mental and physical health,” Howard said — basically, fixed costs that you need to pay, no matter what. She also considers anything related to a birth, wedding, or funeral essential, while shopping, hair, nails, entertainment, and leisure activities fall into her non-essential category.

Once you know how much you’re typically spending on non-essential items, you can come up with a budget that makes sense for your life. Personally, Howard set a $50 monthly non-essential spending challenge for herself in 2023 as a way to reset her spending habits. “When you only have $50 to spend on fun, you have to be thoughtful about whether an item is truly going to be worth dipping into your budget,” she said.

Deciding on your monthly budget is just the first step, though. Howard said identifying the behaviors that might cause you to break your budget is just as crucial. “It’s important to have an honest conversation with yourself about the roadblocks that you think you might face by being on a budget,” she said.

It’s all about knowing what might tempt you to spend money. For some people, that might be impulse buys you see influencers promote on social media, or investing in the latest and greatest tech item because you feel like you need to keep up with trends. Howard recommended unfollowing any accounts you know might tempt you to shop, and instead following creators with similar financial goals to help you stay on track.

Navigating your social life on a reduced budget can also be tricky, Howard said. If you have a friend who always invites you to pricey restaurants, you might need to let them know going out to eat just isn’t feasible for your budget anymore and suggest a lower-cost activity instead. “What sort of conversations or boundaries do you need to put in place to make sure that you can effectively navigate that while you’re on that budget?” Howard said.

No one’s perfect, and no one will be able to stick to their budget exactly month after month. “The biggest thing I want people to take away from it is that I have not been perfect every single month,” Howard said. “Even if I spend $80 or there’s been two months I’ve gone over $100, the takeaway about the journey is that you’ve just got to keep going. When you have those emergencies that come up or maybe temptation gets the best of you on a particular day, just try again.”

It’s also important to make any edits you need to your budget as time goes on, Howard said. Maybe you adopt a pet, start a family, or go through some other big life change and need to increase your essential spending each month.

Or, as Howard experienced in her challenge, your personal priorities might shift over time. “I was convinced that I can do a whole entire year of just me doing my own hair and sticking to the same style,” she said. “As time goes on, I see the value of being able to have those experiences — and they do impact your mental state.” Being OK with adjusting your budget to account for what you need is key to sticking to your long-term financial goals.

Having open conversations around budgeting can also help normalize it in your social circles — and more openness around money can also help you stay committed to your financial goals, Howard said. “That space doesn’t have to be just limited to wealthy people or people who are in more affluent tax brackets,” she said.

Besides having those frank discussions with friends and family, Howard also recommended finding reputable sources — like books written by finance professionals, or even the free resources on Secret’s Money Moves website — to learn more about personal finance. It’s important to speak with a financial advisor, investment advisor, or other finance professionals when you’re ready to get serious about your financial future.

Ultimately, Howard said the best thing you can do with your money is just start saving more. Even if you start small — setting a very manageable monthly budget, then increasing your savings goals as you go — you’ll start to see the payoff in your account balances. “Budgeting is key to your wealth, whether you are on the lower end of the salary spectrum or on the high end,” she said.

This content is for informational purposes only. You should not construe any such information as legal, tax, investment, financial, or other advice. There are risks associated with investing in securities and other investment vehicles.