3 Simple Ways to Make a Budget and Stick to it

silver and gold coins

Meet Henry.

Henry works at a bank and takes home around $1k at the end of every month. On the payday, Henry is so elated and feels like he is ready to take on the world.

Fast forward to the 15th of the month after collecting his paycheck, Henry begins to ask his friends to help him with a little change till the next payday. His friends tell him that he needs to make a budget but Henry feels having a budget is for people with more than enough money to spend.

Do you know someone like Henry? Or are you someone like Henry?

The truth is many of us are like Henry. Our situation might not be exact, but we often find ourselves wondering where all of our money has gone.

Sometimes it feels like money grew wings and flew away.

This statistic shows that only about 40% of Americans have up to $1,000 in savings in case of an emergency. 

Saving money can be a struggle considering that there are things that you plan to do with your money. It could be that you are saving up to buy a friend a gift, or you are saving for retirement or you are saving so you can have a getaway in the wonderful city of Bali or Santorini.

Or it could just be that you spend all of your money on necessities like food, clothing, and shelter.

Whatever the case might be you need to be able to master how to spend money. You can master your money if you make a budget.

What is a Budget?

make a budget calculating numbers
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I believe you know what a budget means, yeah? but just for the sack of transparency, a budget can be defined as a summary of intended expenses coupled with expected revenue.

Although many people might consider a budget restrictive or rigid, the reverse is the case. A good budget protects your finances and allows you to spend on things that matter.

Why you need to make a budget

The simple answer is a budget would help you to take control of your finances. It limits spending money on things that are not important.

It helps you have a handle on your financial state. With a budget, you save yourself a lot of stress that comes with living paycheck-to-paycheck.

Best Budgeting Methods

For you to have a budget that you can follow, you need to choose a budgeting method that works with your needs. Some budgeting methods work best for over-spenders, while some work best for those who just want to keep things simple.

Below is a summary of the three most effective budgeting methods that work for personal use. I would advise that you try out different methods to see the one that works best for you. If none of them works then you should check out these other budgeting methods too.

Here are 3 simple methods to make a budget:

Method One: Zero-Based Budgeting Method

To make a budget with this method, you need to account for every dollar that you earn.

Say, for example, you earn $1k in a month but have a monthly expense of $500. Using the zero-based budget system means that you need to allocate the extra $500 to an assignment.

Are you saving for a new house? Do you want to get a car by the end of the year? Allocate the extra income to these goals.

This method works best if you create different categories that you can spend your income on. Make sure that these categories are meaningful and not just guilty pleasures. This way, unexpected expenses are not unexpected if you know what I mean.

Method Two: 50/30/20 Budgeting Method

This method was made widely popular through Senator Elizabeth Warren’s book “All Your Worth: The Ultimate Lifetime Money Plan.”

This method involves dividing your income into three parts namely Needs, Wants, and Savings.

Needs are expenses that you cannot do without. These include paying for electricity, rents, or repaying debts.

Want are all the upgrades that you need to make life more enjoyable. Examples include watching movies at the cinema, buying Versace instead of Paul Smith, or opting to buy a Mercedes instead of a Toyota.

Savings include investments and money added to emergency funds.

You need to be able to clearly distinguish between your wants and needs if this budgeting method is to work.

If you are someone that considers Ice cream to be a need, then this might not work for you.

Method Three: Envelope System

This method works with cash only.

You would need to figure out all the major expenses you need cash for in a month. Group these expenses into different categories and then allocate how much money you intend to spend on each of them. Also, label an envelope for each category.

When you have done that, go to the bank and withdraw the exact amount of money you intend to spend for the month. Next, put the cash for each category in its respective envelope.

This budgeting method helps you to reduce the need of carrying your ATM or credit card around.

How to make a budget that sticks

Even well-intentioned activities fail sometimes. You could come up with a budget plan but fail to go through with it. Here is how you can heighten the chances of you sticking to a budget:

Keep it realistic

Would you agree to fight an experienced boxer in the dark? Chances are that you would fall flat on your back. You simply have zero chance of success. When making a budget, don’t step yourself you for failure. Don’t push yourself to save more than you possibly can.

You need to be realistic with your goals. Set small and attainable budget goals first, before you move on to bigger ones.

Find an accountability partner

Some of the best things in life come in pairs. Find someone or two who are on the same budgeting journey as you are. It could your partner if you are married or a friend.

An accountability partner checks up on you to see how well you are sticking to the budget that you made. When you make a budget with a good accountability partner, you would get bouts of support and encouragement.

Lose your credit cards

Okay, maybe not entirely, but keep it somewhere you cannot easily reach when you are heading out. Without your credit card, you would limit the impulse buying that you make. This helps you stick to your budgeting goals.

Additional resource: 6 ways to manage financial stress during trying times.


Now, let us meet Henry again. He finally sees the need to make a budget.

He chooses the best budgeting method that works for him. After receiving his next paycheck, Henry is more conscious of how he spends his money.

On the 15th he calls his friends again, but this time he thanks them and asks if they would be free to grab a couple of drinks on him (Don’t worry, he is not spending from his retirement plan).

Are you going to make a budget too?