9 budgeting strategies to help you plan for your future

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Creating a budget can feel overwhelming. These tips will help you get started

by Kathy Evans

September 06, 2023 | Money

There’s no one right or wrong answer when it comes to budgeting. The money-saving strategy that works for you might not be the best technique for someone else, and vice versa.

Still, there are a few basic Budgeting 101 principles we can all agree on: aim to spend less than you make, be deliberate about your purchases — that sort of thing.

To help you abide by those principles, and create a workable budget in general, here are ten budgeting strategies that can help you reach your financial goals.

Why is implementing a budgeting strategy important?

It can be challenging to keep track of how and where you spend your money. By organizing your spending and savings into a budget (a plan that allocates income for upcoming expenses, savings, and paying off any debt), you’ll know what it’ll take to reach your savings goals while meeting your regular monthly expenses.

Accurate budgeting helps you track and save more of your money in the long run, whether you use zero-based budgeting, envelope budgeting with physical or digital cash envelopes, or a host of other budgeting tips and methods.

9 budgeting strategies

The following 10 strategies are great examples of how to budget and save money. These approaches can help you grow your savings, cut costs, and live a more fruitful life.

1. Set clear long-term and short-term financial goals

The primary reason for creating a solid budget is to meet financial goals, such as savings goals, now and into the future.

You might have heard about “SMART” goals before. The term is an acronym for specific, measurable, attainable, relevant, and time-based goals, and it’s a successful approach to help your money go further precisely because you’re setting clear targets. Instead of vague goals, such as “I’m going to save more money next year,” you address the following:

What you’re saving for (specific)How much money you plan to save (measurable)How realistic or doable the goal is (attainable)How important the goal is to you (relevant)Whether you plan to meet the goal in a few weeks, several months, or years from now (time-based)

You can (and should) do this for both short- and long-term goals. Make a list of your needs and wants and when you expect to pay for them.

For example, you might set the following SMART goals:

“I’ll pay off my credit card debt in 15 months, I’ll need $5,000, including interest. To do this, I’ll pay $333 per month. To offset the expense, I’ll make coffee at home, cut back on dining out, and stop using my credit cards during this time.”“I plan to retire at age 65. I’m going to set aside 10% of my paycheck each month to invest in my future by saving for retirement.”

2. Keep a record of your monthly expenses and monthly income

A budget consists of three components: your monthly income, expenses, and savings.

Income is any money you earn and typically includes your salary and wages, interest income, share dividends, and any other investment income.Monthly expenses are any regular outgoing money you pay to others, such as mortgage or rent, food purchases, car payments, insurance premiums, clothing, entertainment, internet service, mobile phone service, and utilities.Savings is any money you have left over.

3. Track your additional spending habits and impulse purchases

Not all spending fits neatly into your monthly expenses. There are also variable expenses.

You’ll also have the occasional medical bill, repair invoice, vacation, impulse purchase, and new subscription. When you account for everything, you get a clearer picture of your spending habits and what you’ll need to adjust to save more money than you spend.

Remember to look through your bank statements for expenses you may have forgotten about, such as automatic payment withdrawals and monthly subscriptions. Canceling recurring payments can free up more of your income for essential expenses and savings.

4. Establish yearly savings goals

Since your budget operates on a monthly basis, many of your savings habits naturally follow a monthly schedule. Don’t forget to set a larger annual savings goal that you can revisit and adjust each year. Here’s an easy way to do this:

Come up with a specific dollar amount you intend to save.Set your deadline and regularly check your progress to stay on track.Calculate how much you’ll need to save each month to reach your annual savings goal. For example, if your goal is to save $10,000 for your emergency fund in the span of 12 months, you’ll have to stash away roughly $834 per month.Keep your money in a secure savings account, preferably one with a high interest rate.

5. Automate savings with a budgeting app

If you’re looking for a “set it and forget it” approach to saving money, check out budgeting apps. These popular tools make it easy to create a budget and stick to it. There are tons of apps — some free, some paid, and with varying features and capabilities — so it’s easy to find one that matches your preferences.

For example, some budgeting apps take a zero-based budgeting approach. You assign every dollar you earn in a month to a specific purpose, whether that’s to pay a bill or add to savings. By the end of the month, there’s no money unaccounted for. Others mimic the envelope budgeting system, top-down budgeting, or even the activity-based method.

Some apps even have a “keep the change” feature where all debit card purchases are rounded up to the nearest dollar. The “change” from the purchases automatically transfers to your savings account.

Budgeting apps can range from simple to complex in operation but are effective in helping you stay on top of your money management, automate your savings, and pay your bills on time.

6. Establish an emergency fund for unexpected costs

When you’re living on a budget, you can use it to prepare for emergencies and unexpected costs. These can range from something as simple as a flat tire or as serious as a health issue resulting in steep medical bills.

You decide the amount you want to save and where you want to store your emergency fund. Many people open a dedicated savings account for it. Generally, you’ll want three to six times your monthly expenses set aside in your emergency fund; however, the amount you allocate will depend on your situation.

To build an emergency fund into your budget, use the following strategy:

Set a specific emergency savings goal.Make consistent, automatic contributions.Regularly monitor your savings progress.

7. Negotiate bills and payments with service providers

If your budget indicates that you are spending too much on things like cable, internet, and your phone plan, you can try to negotiate lower payments with your service providers to increase your monthly cash flow.

Service providers are always competing for your business. Reach out and have a candid conversation with them about:

How long you’ve been a customerWhich services you’re currently paying forHow much you’re paying for their serviceWhat services and prices their competitors are offeringHow much and how often you’re using their services

The goal of negotiating is to save money for the same services or get an upgrade in services for the same money you’re currently paying to see extra money in your budget.

8. Prioritize paying off high-interest debt

Examples of high-interest debt include credit card debt, student loans, and medical bills. Three common debt reduction and elimination budgeting methods are:

Snowball: Pay the minimum amount due on all your debts and use any leftover funds to pay down the debt with the lowest balance. While you’ll see quicker results with this approach, you’ll pay more in the long run.Avalanche: Make your minimum payments on all debts and use your remaining funds toward paying off the debt with the highest interest rate. This approach may take longer, but you pay less in interest over the life of your debt.Debt Consolidation: Combine small debts into one larger debt, making one regular payment instead of several monthly payments. This would require outside assistance.

9. Pay your credit card balance in full

Last but not least, to avoid interest charges, always pay off your credit card balance in full each month. Use them for a regular monthly expense, such as a cell phone bill or utility payment. Since these bills are already accounted for in your budget, you’ll have the funds to pay off the charge on your credit card. This keeps your credit utilization rate low and can even boost your credit score.

Where life insurance comes in

A common myth is that life insurance is nice to have, but can be too expensive for most people. We’d argue it’s the other way around — it’s essential to have, and surprisingly affordable.

For one, going without leaves your loved ones at risk of being financially unprotected should the worst happen to you. Think about it: Who would pay for gas, groceries, housing, and more, if you weren’t around?

For two, term coverage — which lasts for a set period of time — is typically the most affordable type of life insurance. Thanks to 21st century underwriting innovations, it’s even more affordable than ever. Find out how much life insurance you might need, and what a Haven Term policy in that amount might cost, today.

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus

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