Whether you’re earning a six-figure salary or just out of college, learning how to budget is an essential skill for building a secure financial future. Especially with the current economic climate, having a budget that you can stick to may help keep spending under control, improve your savings, help you plan for retirement or other future goals, and keep debt manageable.

In many cases, creating the budget is the easy part, but actually using the budget is more challenging. To stick to your plan, consider changing your mindset around budgeting, and think of it as another tool you can use to pursue your financial goals.

So how do you create a functioning budget you can use for the coming months and years? Here are a few ideas:

Personalize It

You don’t have to accept the default categories that budgeting templates offer. If you enjoy dinners out more than travel, you may want to include dining out as a category. If your interests change down the road, you can always add or change your categories to fit your lifestyle.

Consider One-Off and Incidental Expenses

While you may be aware of what you’re spending on your bills, clothing, or entertainment, unexpected expenses can potentially derail your budget if not adequately accounted for. Things like emergency trips to the vet, a sudden school expense, or a replacement vehicle if your car suddenly dies. These things happen, and to account for them, you should include them in any budget you create.

Include Realistic Income Projections

When budgeting your income, it should be the income you already earn, or reasonably expect to earn. Avoid estimating commissions you could earn, a potential year-end bonus that you may or may not receive, or income from a side job you intend to start, but haven’t yet. Aim only to include the income that you are actually earning.

Create an “Actual” Column

At the end of each month, try taking some time to enter all of your actual expenses and compare them to your budgeted amount. If you’re under, great! If not, see if there are ways to adjust your budget, or scale back your spending.

Review and Revise

Like everything in life, things change from year to year, sometimes day to day. Regularly review your budget so that it reflects your current situation, goals, and preferred lifestyle. Be open to making changes, adding or removing categories, or even adjusting budgeted amounts.

While budgeting may not seem that exciting, it's a skill that can help you achieve your financial goals with more certainty, and may significantly reduce financial stress, which makes it well-worth the effort. Commit to starting your new budget now, and your future self will thank you!

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