How To Stick To A Budget: Money Management For Beginners

Starting To Plan Your Budget

It can seem very intimidating to be in charge of your finances for the first time. Whether you’ve just graduated and are about to get your first real job, or you’ve been living paycheck-to-paycheck for some time but are ready to start saving for your future, this guide will take you step by step through the budgeting process.

First things first- you need to think about why you are budgeting. Do you have a lot of debt you want to get paid off? Are you saving for a big purchase? Have you set a long-term goal of retiring young? Putting money into savings and denying yourself instant gratification can be frustrating, so you want a clear picture of why you’re doing it in the first place. It will be easier to pass up that expensive morning latte if you can console yourself with the thought of a debt-free existence, or picture yourself lounging on a beach with a drink in hand after you’ve retired.

• What is your current financial state?

Take into account everything going on in your life right now. Do you have a steady job? How much debt do you have? Where are you living, and what are the costs? Do you have any savings? Collect all the information you can regarding your income and expenses each month, and think about how much you expect them to fluctuate.

• How much knowledge do you have about finance?

You don’t need to be a guru to set a budget and save for your goals. However, a solid knowledge base about money will help you in ways you can’t imagine down the road. Maybe right now you just want to get some debt paid off, but what about when you start investing? Do you understand all of the options available? Do you know how to analyze your loans to see which will cost you the most over time, and when it’s a good idea to refinance? Do you understand the concept of compounding interest, and how essential it is to start saving early and letting money grow?

Don’t be intimidated how much advice is out there! If there’s a topic you want to brush up on, simply google Beginner’s guide to. and read articles written for people just like you. You don’t need to be a professional analyst to get a good understanding of investing options. One book I personally recommend is Boglehead’s Guide to Investing. It’s written for beginners, and tells you exactly what you need to know about stocks and bonds, and no more. It explains in simple terms how to pick an index fund (a basketful of stocks lumped together so you don’t have to pick each individual stock yourself) and how to spread your money between investments. This is the book I read when starting out, but there are plenty of other personal finance books and websites out there.