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Bottom Line Up Front

  • A budget can lay bare what's available for saving, debt repayment and spending. 
  • When creating an initial budget, keep it simple to help you stick to it. 
  • You can set yourself up for success by identifying your personal budget blockers that threaten to thwart your commitment. 

Time to Read

2 minutes

June 7, 2022

Some people roll their eyes at the word “budgeting.” But they may not realize it’s a powerful tool that can help you reach your personal finance goals. Budgeting isn’t meant to just outline things you have to pay, like rent and insurance. It’s also a plan to build room for things you want, like entertainment or vacations.

Additionally, it’s a great way to prioritize creating an emergency fund for unexpected expenses, setting spending limits and paying off debts like credit cards and student loans. If you’ve tried to budget in the past but had trouble getting started or sticking to it, here are some ideas to help you reap the rewards of good money management. 

Why Budgets Work 

As you work through the budgeting process, you’ll begin to see spending patterns in your bank and credit card statements. That can help you see which areas are due for a trim. A budget can provide clarity on how much you can save, apply to debt repayment and spending. By following your budget, you’re more likely to reach your financial goals and avoid debt or overdrawn bank accounts. 

Overcoming Budget Challenges

Making it too complicated. Some people love to create budget spreadsheets, but others need something simpler, like the “four walls budget.” This is based on the idea that your personal budget should cover what it takes to live—food, shelter, basic clothing and basic transportation (and saving whatever's leftover).  At Navy Federal Credit Union, we also have a simple monthly worksheet to get you started. Don't be afraid to try simple budgeting apps, too!

Going too far with budget cuts. To budget, you need to be realistic about what to reduce or cut out. Just like starting an overly strict diet makes it more difficult to lose weight, creating a budget that leaves no room for flexibility or spending money may be harder to follow.  

If there’s not much money left after paying fixed expenses like car payments and rent, start small as you cut back and work toward making larger changes. Think of it as working with a chisel, not an axe. Are you paying for a streaming service or subscriptions you don’t use? If you eat fast food or stop for coffee, could you pause that behavior and put aside what you’ve saved? Keep in mind that over time, even small steps can give you big payoffs. 

Remember, don't overextend yourself—do what you can and be patient and consistent. 

Finding it hard to resist impulse spending. Some people find it helpful to picture how they’ll feel when they achieve their goals, like paying off credit card debt or buying a car. That can be a powerful incentive to avoid impulse buying and work toward your goal. Many of our members like to remove the temptation to spend by starting with a small automatic deposit on payday to a savings account.

Thinking of it as a chore instead of a plan. Changing how you think about a budget can also affect your success. Find ways to make it fun: 

  • Name it after your goal. If you name your budget after your goal—like the “Hawaiian Vacation Plan”—you won't lose sight of the prize. 
  • Make it a game. Do you love to win? Beat the budget by finding ways to have extra money each month. Enjoy healthy competition? Challenge a friend to a savings goal to see who can reach it first.
  • Reward yourself. If you set a reward for yourself, it will help keep your interest. For instance, if a long-term savings goal is a new fishing boat, you could reward yourself with a new tackle box for sticking to your budget for a month. 
  • Don’t forget to budget for entertainment. All work and no play can make anyone bored and frustrated. Remember to budget money for the activities and things that make you happy. 


Next Steps Next Steps

  1. To see where your spending stands now, fill out our simple budget worksheet in next steps or use our online monthly spending calculator.
  2. If you need help getting started on your budget, our Personal Finance Counseling team is here to help! 
  3. Make sure saving is always a part of your budget by setting up automatic transfers to your savings account.


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.