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Tips and Tricks For Budgeting

Tips and Tricks For Budgeting

March 20, 2019
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Budgeting is a skill.

You won’t get it right on the first go-round. You will overspend in some areas, you will under-spend in others, and you may even spend in areas you completely left out.

The key to creating a budget that works for you and your family is sticking with it. Budgeting is like riding a bike: the first time you tried riding a bike, you most likely failed. You fell over, lost control, and maybe hit a couple of parked cars. But you probably kept trying until you were successful.

The same is true with budgeting. You may fail in your first few attempts, but you shouldn’t quit. You need to keep trying and keep making adjustments until you get it right.

To help you create a budget, we’ve laid out some steps you can take that may help you in the long-run.

  1. Decide what you want your money to do.
  2. Save.
  3. Invest.
  4. Spend on what’s important to you.

Now, let’s dig into each of those steps.

Decide What You Want Your Money to Do

The very first step to creating a successful budget is figuring out what is most important to you financially. What do you want your money to accomplish in this week; this month; this year?

One thing many people get wrong about budgeting, is restriction. Budgeting is not meant to restrict spending. You may be more successful in your budget if you look at it how we look at it – as a freedom.

Budgeting is meant to free up money in areas that you value most in your life. If you value traveling, then travel. Allocate funds every month to travel. If you value eating out every night, allocate funds to eating out.

Rather than saying “I will spend $50 on ‘X,’ $30 on ‘Y,’ and $20 on ‘Z,’ start by asking yourself, “What’s most important to me?”

Budgeting is not meant to stop you from spending in areas that you value most. You don’t have to stop eating at restaurants because your budget doesn’t allow it. If you like eating at restaurants, then do it! Just include an appropriate amount in your budget each month.

With that said, if you are going to spend money traveling and eating out every month, you will have to tighten up in other areas.

This may be different advice than a lot of books will share, or other financial advisors will give you. That’s because we’ve found budgeting to be dependent upon personality type. Writing line items in a spreadsheet every month then capping yourself at a certain amount may not work for you.

For example, let’s say you allow $50 per month to be spent hanging out with your friends. You’ve hit your limit, but the weekend rolls around and your friends are all going out to dinner. I’m not sure about you, but I would go. Despite having reached my limit, I would go out with my friends.

For others, that may not be true, but I think most of us would go.

So, again, budgeting depends on your personality and your values.


Once you’ve determined what you value and what you want your money to accomplish, you need to save. Save before you spend. In other words, “pay yourself first.”

Saving is dependent upon your long-term goals and income. If you’re 25 and on-track for retirement, spend what’s left – that’s fine. Treat yourself.

If you’re not on-track to address your long-term financial goals, you need to tighten up the budget a bit in order to save an appropriate amount. I know budget is a positive exercise and a freeing exercise, but if you’re spending and spending and spending without saving, you’re setting yourself up for long-term failure.

Jocko Willink says it best in his Field Manual:

“Discipline equals freedom.”

Be disciplined with your money now, so you may reach financial independence in the future. Save what you need.

If you doubt your ability to stay disciplined, reference step three of your DWM Stick-to Financial Planning Magnet: utilize automatic, systematic savings plans (if you don’t have a magnet, let us know; we’ll send you one).

Setting up an automatic savings plan that takes ‘X’ dollars every month and automatically transfers it to a savings account, saves you the hassle and hardship of manually moving that money. Eventually you’ll forget it’s even happening and live off of the money you have left.


Step three – invest – is similar to step two. This ties into paying yourself first.

Understanding your long-term financial goals – I’ll use retirement as the example – strongly plays into creating a successful budget. If you want to retire at 65, you need to invest appropriately. You need to make your money work in a manner that will help you address financial independence at 65 years old.

Depending on where you’re at in your life, you may have to allocate more to investing and less to your monthly budget. Or vice-versa.

If you want to join the FIRE community (financially independent, retire early), you need to invest even more. Rather than 15%, you may be looking at an amount closer to 50 or 75% of your income. Therefore, you’ll need to tighten up your budget even more to the point where you may be cutting out the things you value most.

To recap, determine what you want your money to accomplish, save, then invest. And finally:

Spend on What’s Important to You

This is the fun part; at least it is for me. I like spending.

By this point in the process, you know what you value; you know what you want your money to accomplish; you’re paying yourself first, and you’re investing for your long-term goals. The money that remains is the money you spend.

It’s pretty straight forward – I won’t tell you exactly what to spend your money on. You have necessities: bills, food, shelter, etc. But you also have what you value: traveling, eating out, skiing, etc.

So, our advice: try it out. Change it as you go. Again, you probably won’t be successful on the first try. Keep changing and adjusting until you figure out an appropriate amount to spend in each area of your life.

One final tip: make more money. If you increase your income, it’s a lot easier to pay yourself first and budget for the things you enjoy most. It makes your budget more freeing and the spending easier each month.


There are four steps that may help you create a successful budget.

  1. Determine what you want your money to do.

What do you want your money to accomplish? Figure out what it is you value the most in life and move forward from there.

  1. Save.

Save first. Utilizing an automatic, systematic savings plan may help you in the long-run.

  1. Invest.

You have to understand your long-term financial goals, before you can create an appropriate budget. If you want to retire in forty years, make sure you’re investing appropriately to address that goal.

  1. Spend on What’s Important to You.

The fun part – spend the money that remains. Buy food. Take a trip. Go out with your friends. Whatever you value most, allocate funds to doing so and enjoy it!

For more on budgeting, check out the Mind of a Millionaire Podcast.   


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

No strategy assures success or protects against loss.