I have written quite a bit about budgeting over the last few years since making a personal budget was one of the keys to getting my finances under control. Just like most people, I always hated the idea of budgeting, but once you get a better understanding of the freedom that comes with using a budget you fall in love with it. Or at least I have. 
Budgeting can be fun!
The thing I regularly finding myself telling people is that budgeting is not necessarily a restrictive task. It isn’t all about telling yourself “NO” all the time. In face, as Linda and I have become better at budgeting, we find that it allows us to tell ourselves “Yes” many times when our natural inclination would be to not do something.
For example, before we had a budget set up, all our money was in one big pot, so if we bought a new lamp for our living room, it meant that we were going to have less money for groceries, or to fill our gas tank up. As a result we never really made purchases like this. It just felt foolish to buy something we didn’t NEED when we weren’t sure we’d have enough money to cover the things we did need.
Interestingly, after creating our budgeting, and separating all those NEED-based expenses from the nice-to-have expenses, it really changed the game. Now we now budget money each month for house decorations. It is a pretty good feeling to be in the mall and see a picture that would go great in our bedroom and be able to say “Yes” knowing that it isn’t taking groceries off the table.
Now just to be clear, we do still have to tell ourselves “No” – if that picture was more than we had budgeted, we would tell ourselves “No” until we had saved enough for it. And to be honest, when we started budgeting, we didn’t really have enough money coming in to budget for a lot of “fun” things like that. It was mostly important stuff like bills.
The sacrifices are only temporary!
But it is important to remember that financial sacrifices you make are almost always temporary. Most of us get ourselves in financial messes and have to dig ourselves out of them. Once you are out of it, things are a bit easier to maintain.
It’s similar to losing weight: it is easy to gain weight, requires only a little effort to maintain your weight, and takes a lot of effort to lose weight. Financially, it is easy to get ourselves in debt, requires some effort to only spend what you earn, and it takes a lot of sacrifice to get out of debt.
Recommended articles about budgeting
So with that, I will leave you with a bunch of articles to get you started creating your own personal budget!
- How to make a budget
- 10 tips for a better budget
- How to budget using the envelope system
- How to budget with ING Direct
- 7 Free budgeting worksheets
- How to manage your bill payments
- How I organize my bank accounts
- 10 Personal Budgeting Spreadsheets
- How to quit spending more money than you make
- Free budgeting form
- Money management tips for beginners
- Budgeting is like baking cookies
- Free Budget Software
Recommended books and resources for budgeting
Recommended budgeting software
Let me first say that purchasing software is not necessary to create and maintain an effective budget. There are many people who use a pen & paper budget, the good old envelope system, or an excel spreadsheet and do just fine.
However, after having spent some time with the software options below, I can understand why people might want to use them. If used properly they can make the budgeting process a lot simpler and easier to maintain. So if you do try any of the options below, I suggest taking advance of their free-trial offers to make sure that it is a system that will work for you.
Or you might want to check out Mint.com (Mint.com Review). They are exactly a budgeting tool per-se, but they are a free money management tool that may suit your needs.
| Name | Price | Notes |
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As little as $7.40 /month | Mvelopes is the budgeting system created by Crown Ministries. It is based on traditional envelope budgeting where you divide your paycheck among envelopes designated for specific spending categories such as groceries, food and entertainment. Using these envelopes you can easily create a budget or spending plan that provides you with daily, up-to-date balance information for each spending category. You can proactively manage your spending as you build up envelope balances for upcoming expenses, and easily see how much money you have left to spend in each category, and how long it has to last. I currently use Mvelopes and really like it. You can find out more in our Mvelopes Review. |
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$59.99 | YNAB3 is budgeting and money management software that also allows you to budget using “virutal” envelopes. The YNAB team has been constantly working to improve the software and it shows. The newest version (YNAB3) has been getting great reviews from the users and the press alike. YNAB’s ability to make budgeting much easier and fun makes it an easy product to recommend. |
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$4 /month |
NeoBudget is pretty similar to the Mvelopes system mentioned above, but a bit cheaper. It doesn’t doesn’t come loaded with as many features and isn’t as “pretty” as Mvelopes, but if you are looking for a basic tool for managing your ‘virtual’ envelope budgeting system it will work for you. Neobudget also offers a free 7-day trial to test it out. |
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$3.00 /month |
PearBudget is a lesser known online budgeting tool that is worthy of mentioning. They aren’t as feature-rich as the other two, but that could be by design. They market themselves as “a really simple budgeting and expense tracking service.” They are quite a bit cheaper than Mvelopes and may or may not be cheaper than YNAB (depending on how long you use it). |
{ 10 comments… read them below or add one }
I like this article and am crazy about budgeting. You made a very key point about separating the NEED-based expenses from the nice-to-have expenses. For people getting out of debt, this is a lifeline.
Another great budgeting app is NeoBudget. It’s a much more affordable alternative to some of the ones listed here, and I think it’s better. But of course I may be bias since I created it.
“But it is important to remember that financial sacrifices you make are almost always temporary.”
So true! It’s almost like you need to stop what you’re doing and move from behind your budget to in front of it–like an adult “time out”!
The first piece of advice that comes to mind is “don’t be afraid to mess up”. You first budget isn’t going to be perfect, nor your second… It take some trial and error to start getting it right, but that’s ok. You’re learning a new skill, and that takes some effort and time to do.
It’s an amazing feeling to go on vacation, buy something at the store, give a gift, and know that it’s paid for and you don’t have to worry about a check bouncing or a credit card bill at the end of the month. Enjoy the freedom a budget gives you!
totally agree with Matthew above – getting started is more important than getting it right the first time around. it’s amazing how far my wife and i have come along since we started seriously taking responsibility of our finances 2 years ago.
i still like Mint.com even though they were bought by the big Quicken monster, Intuit. it allows me to effortlessly track my spending, income, and investments and unlike some of the other software – it’s FREE!
That’s fine, but what if you really don’t have much money left over after you pay your debt?
Creating a budget and estimating expenses is never perfect the first time. You’ll need to go through a few iterations. The most important part of budgeting is the sister skill of tracking your expenses. If you’re tracking your expenses, either on paper or in software, you can see how you’re doing and have the visibility to say “no” or “yes” (as Bob puts it)
. I agree that it can be fun and liberating!
Hey,
I like the way you describe the budget like a big pot. If people understood it the way you described, they’d have a much easier time being disciplined. You’re right about not being able to justify certain purchases. We’re in that boat right now. We’ve got the income coming in okay, but there’s some catch up work we need to do from before we were taking advantage of tips on budgeting that we were avoiding to implement in our personal finances.
Cheers,
Guy
For us, having separate accounts has been huge, especially with necessary categories like clothing, child care and food. Having *realistic* budgets has enabled us to really know what money we can put aside for savings and what money can be spent. I has really taken the stress out of clothing shopping….in the past, purchasing needed items, but feeling guilty that money was being spent. I will say that it has been a hassle to chart every grocery store purchase…sometimes 10-15 entries a month, but it has kept the budget in check.
Really impressed with how simple Pear Budget is. If there is anyone else out there like me who doesn’t like graphs, equations, or . . . uh oh . . . EXCEL
Then definitely check this one out! thanks Bob