10 Powerfully Smart Budgeting Tips For Beginners

Today I want to dive into taking a look into some really smart budgeting tips for beginners. Simple and straightforward tips that you can use immediately.

When you first take steps towards managing your finances, the thought of making a budget from scratch can be incredibly daunting.

And I get it, because my first budgets (yes, plural), were really hard to create and even harder to actually make them work. In fact they didn’t work that well and that’s why I had quite a few!

But my goal today is to hopefully make your budget task seem much more manageable!

By looking into some of my favorite budgeting tips and tricks, as well as identifying why a budget is so important.

So let’s take a look, shall we?

How should a beginner start a Budget?

When getting your personal finances in order, one of the best places to start is learning how to budget your money.
By taking your monthly outgoings and deducting them from your income, you can figure out what ‘disposable’ income you have.
And from there you can work out what you can afford to spend and what you can save.

10 Budgeting Tips and tricks For Beginners

Below are 10 of my favorite smart budgeting tips, all of which I found really helpful when I finally began my budgeting journey.

You may find these work for you great, or you may find they need some adapting to work with your lifestyle. Whatever the case may be, these beginner budgeting tips are a brilliant starting point for anyone!

1. Work Out Your ‘Why’

I have mentioned it before, and I’ll say it again, knowing your reasons for budgeting make all the difference. Creating budgeting goals, your why, really can be the difference between a great budget and a broken one.

Whether it’s so you can save for a new car, a mortgage or so you can pay off your debts. Knowing why you want or need to make a budget can help keep you driven and motivated to stick with it.

We have all tried to complete a task we don’t really care for, but as soon as a reward is offered it boosts our commitment and drive. Budgeting works the same way!

If you set yourself a budget that allows you to buy a new car in approximately 6 months, by saying ‘I will buy a car in 6 months time as a reward for sticking to my budget’ gives you a real, tangible prize for all your hard work.

2. Plan Your Savings Into Your Budget

One thing many of us are guilty of doing when building a budget plan, is forgetting to include savings. And that is why it is one of my most important budgeting tips for beginners.

We work out our income and outgoings, and feel like we have plenty left over to spend on whatever we fancy, and then a surprise expense pops up and the realisation you have no savings dawns on you.

By building your savings directly into your budget plan, you can eliminate this issue ever happening again!

Because your savings are then ‘fixed’ as one of your main budget items, you can never forget about them. You know your ‘free’ spending money is whatever amount is left.

Young couple arguing about their finances because they don't know the best budgeting tips for beginners
Talking money is another one of the essential budgeting tips for beginners

3. Build Up Your ‘Sinking’ Funds

‘Sinking’ funds refers to a type of savings with the sole purpose of paying off large or annual expenses. Sinking funds are for expected expenses, whereas your emergency fund is for unexpected expenses.

Building up your sinking funds to account for any irregular payments is a great tip when budgeting.

By planning for those expenses in advance you are guaranteed to have the money to pay them off, instead of being caught off guard and risking debt!

Related post: 11 vital sinking fund categories for your financial Wealth (& 60 more!)

4. Make Sure You Have ‘Buffer’ Funds

What do I mean by buffer funds?

This is a small sum of money that you leave unaccounted for when you first begin your budgeting.

I know this goes against much of the personal financial advice you may have read about the zero based budgeting method or the 50/30/20 budget.

The thing is, as a beginner it can be difficult to account for every penny, so having a small pot that gives you a bit of leeway can really ease the pressure.

And if by the end of the month you haven’t used it, you can decide whether you want to save or spend it on a treat, or save it for a treat. The choice is yours.

What is the 50 20 30 budget rule?

The 50 20 30 budget rule is designed to be super simple way of budgeting money for beginners and experience people alike. 50% of your money goes towards your basic necessities, 20% to savings and 30% goes towards entertainment/pleasure.

Do you think the 50 20 30 rule is an appropriate budgeting tip for beginners ?

I am not a fan of the 50/20/30 rule as a budgeting tip when you are in debt or just starting out. It’s not a great idea to be spending 30% on fun when you’ve debts to pay or you have no emergency fund and haven’t started retirement planning. 

5. Review Your Spending Weekly

Reviewing your spending regularly can be the best way to keep your finances on track.

It allows you to see what your spending habits are doing to your budget. And whether you need to cut back or if you have a little more to spend than you thought.

Weekly tracking is the best in my experience as it allows you to keep a close eye on what you spend as you spend it. Plus by the end of the month it can often be too late if you have overspent.

So by tracking your spending each week, you can often get a more accurate picture of your spending before you overspend, and easily see where your money is going.

Maybe you had a Starbucks every day this week and that’s cost you $20 that really could have gone towards gas.

Because you caught this in week 1, you know that next week you need to take your coffee to work in a flask so you can save that money instead.

If you were tracking this monthly, you would have spent $80-$100 on coffee before you even realise it! It’s simple budgeting tips like this that can make or break a budget. Trust me!

Young couple going through the finances using the best budgeting tips for beginners.
Smart budgeting tips for beginners are often the most simple of tasks

6. Ignore Your Bank Balance

This is one of my personal beginner budgeting tips, and I know it may sound strange. Surely if you are tracking your spending you need to see your bank balance, right?

Well, actually no.

Because card transactions can often take a few days to show up on your statement, trying to track your spending from your bank balance can often give you an inaccurate figure.

Whether it is higher, because it hasn’t processed your grocery shop this morning, or lower because you have money coming in.

It is always best to track your spending yourself, whether it is in a physical budget planner, a digital budget planner, or even just a standard notebook.

By tracking it yourself you can have a much more accurate representation of your finances.

7. Build Up Your ‘Emergency’ Funds

Budget tips for beginners and seasoned alike will always have building up your emergency funds as a priority budgeting tip.

Because emergency money is extremely important to have. Emergency funds are another pot of savings similar to sinking funds.

The main difference between the two is that emergency funds are designed to keep you afloat mid-term, if anything bad should happen. I.e. an emergency that you could not have forseen or planned for.

Typically they consist of up to 3-6 months income (though many people aim to build it up to 12 months eventually) and should be enough to cover your bills and rent for a decent duration of time.

This is to cover your back in case you lose your main source of income, whether that is due to job loss, illness or some other reason entirely.

By having a few months worth of bill money stacked up, you can have some peace of mind knowing your rent, utilities and food costs are covered, should the worst come to pass.

Related posts:

Emergency Fund Examples: 23 (Unexpected) Reasons Why You Need One

Why You Should Have Two Emergency Cash Accounts

8. Leave Yourself Some ‘Fun’ Money each month

Another one of my best budgeting tips for beginners!

This is literally just a small sum of money that is entirely yours for some guilt-free spending

Even with a budget it is important to allow yourself some ‘free-spending’ money, otherwise you will never have any money to treat yourself, and it will be difficult to maintain your budget!

Black noteboard with writing on about budgeting tips for beginners.
Budgeting hacks or tips often include tracking you spending – so powerful!

9. Use Cash Rather Than Cards

This one is a double budgeting tip.

Firstly, it ties into banks sometimes showing an inaccurate balance.

By taking your money out in cash, you can physically see and track what you spend at any given point. Making it far easier to know when you need to cut down on spending or not.

But there is also a psychological element to it as well. According to some studies, people are less likely to spend their money if they have to physically hand it over.

Those who spend cash are often more inclined to really consider a purchase before spending money.

Whereas those who spend money on a credit or debit card, are typically more likely to make impulse purchases.

10. Be Kind To Yourself!

Probably one of the most important budgeting tips for beginners I have for you.

Smart budgeting is all about being firm, making a plan and sticking to it. But sometimes life doesn’t follow a plan, and your budget goes out the window.

Remember: That is Okay!

If you stumble and make a mistake, or a large expense comes up and you end up back at square one, try not to beat yourself up over it. Just reassess your situation and start again.

We are all only human, and that means mistakes are bound to happen, just don’t let them overwhelm you!

These simple budgeting tips can be invaluable when it comes to getting your finances in order.

And remember, budgeting is all about balance. You want to balance your income, with your spending and savings.

Being super strict and not allowing yourself any fun at all, will lead to an unsustainable budget, and a constant feeling of failure when you spend money.

In order for you to stick with this, you want to allow yourself some kindness and freedom, but remain firm at the same time.

Allow yourself that book you’ve been eyeing up since its release, but maybe forego the Starbucks to make up the difference.

Or if you have ‘fun’ money to spend, give yourself a treat day as a reward for doing so well that month.

Sustainable budgets are all about this balance, and this is where many beginners make mistakes when they begin budgeting.

financial paperwork with heading of rethinking the budget
Personal budgeting tips need to work for you

Frequent budgeting Mistakes Beginners Make

Why do budgets fail?

As with anything in life, when people start out trying something new mistakes are often made.

And learning to budget is no exception to this. We have already touched on many beginners making the mistake of balancing their budget poorly, and not allowing themselves enough ‘fun’ money.

But what other mistakes do beginners make when trying to create their budgeting system?

1. Aiming For The Perfect Budget

As I touched upon in my 10th tip, budgeting is about planning but life doesn’t always go to plan. Therefore it is impossible to have the perfect budget.

I see a lot of people strive for this perfection, and then be really tough on themselves if something goes wrong.

In order to create a successful budget, it is important to drop this idea of a ‘perfect’ budget.

Otherwise you will spend a lot of time feeling like a failure, and that budgeting is impossible, when it really can be simple!

2. No Plan For Savings

Not including savings in your budget plan is another mistake which happens a lot!

When people are writing a budgeting strategy and listing their expenses, they can often forget to include savings. This is mostly because they are a self-imposed ‘bill’ rather than a payout to a company.

But it is incredibly important to account for savings when building your budget, otherwise you may find yourself suffering at the hands of debt, should a large expense occur.

young woman in pink top sitting on the floor against a sofa doing her finances with calculator in hand to show  personal budgeting tips.
Simple budgeting tips include sinking funds and tracking your money

3. Not Planning For Irregular expenses

People often think they can get away with not planning for their irregular expenses because they have a decent emergency fund, or substantial savings.

But this is not a good attitude to have in my experience.

While you may have enough to cover any irregular expenses that come your way, you don’t really want to be taking that money out of a different pot.

What if you pay off a debt using your emergency funds and then suffer an injury that leaves you out of work?

The money that was saved to help in this kind of situation has been spent elsewhere. So now you need to worry more about getting back to work, than on recovering.

If you had set up sinking funds for your irregular bills then it would have been a different story. You could rest up and heal knowing you have enough money to cover a few months worth of bills.

And that is why it is important to plan for these irregular expenses!

4. Giving Up If A Mistake Is Made

One of the biggest mistakes I think people new to budgeting make, is giving up on the whole thing if one thing goes wrong.

And this ties in greatly with everyone having this idea of a ‘perfect’ budget.

Once you scrap this idea that in order for your budget to be effective it needs to be perfect, the entire process becomes so much easier.

So what if you over spent on takeout this week? Just try and cook from home more next week.

One mistake typically isn’t going to completely destroy you financially (so try not to act like it has if you buy too much coffee one week!)

Budgeting isn’t an exact science, it can take a lot of trial and error to figure out what works for you and your household.

So bear that in mind if you struggle one week and slip up, or something unexpected happens you had not prepared for.

As long as you get back into the saddle and try again, nothing is truly a failure, only a learning experience!

Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.


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Last Updated on 22nd October 2021 by Emma

About Emma

I'm here to help you become confident in making the best money decisions for you and your family. Frugal living has changed my life, let me help you change yours.

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