Making your money work harder—and smarter—for you. It all starts with a budget

Whether you’re saving up for a down payment on your first house (that renovated Cape Cod a few blocks over sounds nice) or simply trying to get a better handle on all of your finances, one of the first steps to take is to create a budget.


Starting a budget can be easier than you think


At its core, a budget is a way to give money a purpose. You outline how much money should go to each of your expenses and do your best to stick to it. And while there are a ton of ways to create one, a budget “really doesn’t need to go beyond writing out your income and expenses," says Mandy Kelso, budgeting enthusiast and Financial Education Strategy Lead at TD Bank. "From there, categorize your spending and just think of some easy ways to save.” Kelso adds that a solid budget really only requires you to know what you make, track what you spend and balance both to help achieve your money goals.

The reality is, budgeting doesn’t have to be all about doing less of the fun stuff. A great budget leaves room for everything life can offer—it just makes you think about what you’re spending money on. And deciding whether it’s a want or a need.


Getting your budget started


Kelso understands that the notion of a budget can be scary for some: “It’s easy to feel intimidated early on and forget that getting started is the most important step you’ll take in budgeting.” But here's the good news. You can get things rolling in 3 simple steps.


1. Write out your “why”


No one starts budgeting without at least one really good reason. Before anything else, take the time to write out why you even want a budget—and what you hope to gain from it.

Your budget should feel good, and you can easily achieve that good feeling by knowing ahead of time what a winning week, month or year looks like based on your goals. And of course, celebrating milestones like saving for college, building an emergency fund, paying off debt, planning for retirement and many others feels pretty good, too.


2. Pick the right tools


There are plenty of tools to help you monitor and adjust your plans, so be sure to take full advantage.

  • Checking/savings account features—connect each of your accounts to an app or worksheet for real-time monitoring during the month.
  • Worksheets—there are tons of spreadsheets out there to help with expense tracking. You can find ours here.
  • Apps—check out those that make looking at your expenses in real time easier.

“Whatever you choose to use for your budget, be sure to connect your accounts and take advantage of the technology,” says Courtney Mitchell, Head of Consumer Deposit Products and Payments at TD Bank. “Tracking what’s going in and out is the secret to success.”


3. Create your first plan


Once you have your app or worksheet ready to go (with your accounts connected to make things super seamless), it’s time to take a good hard look at your spending as you make a plan for the future.

There are several ways to set this plan up. One idea is to start following the 50-30-20 rule (where 50% of your income covers your needs, 30% wants and 20% savings and debts). Another way to start your budget is to have a specific goal in mind, like building an emergency savings fund or paying off debt, and start planning out how you’re going to tackle that goal.

With the goal-tackling strategy, it’s good to have other ideas simmering on the back burner that you can start addressing after you hit your first goal. For example, you might want to pay off your student loans first, then make saving for a down payment your next goal. That way, you immediately have another plan in place once your loans are paid off.

The first step in actually creating your budget plan isn’t limiting your spending—it’s simply looking back and learning from what you regularly spend. Once you have a strong “why,” the right financial tools and a handle on your current spending habits, you’ll find it’s pretty simple—maybe even fun?—to put together a plan and stick to your budget.

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This article is based on information available in February 2021. It is for general informational purposes only. It is not intended to provide specific financial, investment, tax, legal, accounting, or other advice and should not be acted or relied upon without the advice of a professional advisor. A professional advisor will recommend action based on your personal circumstances and the most recent information available.