Principles

Here are some guiding principles to help you budget well. If you want to jump into how to set up your budget, jump to Buckets Method.

1. Live on last month’s income¶

Spend this month what you earned last month. If you’re not able to do it yet, make it a goal. You really can do it—Buckets can help you!

When you start living on a month’s supply of income, start saving to have a “spare month’s supply” of income. Then, can you make it two months? Then three? Think about how far you want to take this.

2. Use the right tools to help YOU¶

Budgeting tools can be good for math, automating tedious things, presenting potentially hidden information, reminding, tracking trends over time, helping you see what is going where so you can adjust spending habits, and give you solid data. Budgeting tools are not good at earning money, saving money, or putting that candy bar back at the grocery store checkout. Tools are just tools. Effective budgeting is all about you.

3. Think of your budget as something that evolves¶

The more you practice budgeting and spend time reviewing and adjusting your habits, the better off your budget will be. Commit to keeping a learner mind-set and think of your budget as something that evolves.

4. Define what your values are¶

What do you value most and want to prioritize? Sitting down to make a budget is a great time to align the dollars with your heart. (If you don’t, who will?) Perhaps you want to prioritize retiring early, starting a business, or getting out of debt. Or maybe the top priority is being in agreement about money with your significant other, finishing a degree, or traveling together. Still yet, it could be contributing to a personally significant cause, simplifying to create a better work/life balance, or prioritizing health/healing. Your priority may or may not be on this list–it could have something else to do with freedom, accomplishment, security, peace, adventure, wellness or whatever.

Take your time here. Really think about what you value most. A good budget is realistic and yet incredibly hopeful as well. Make it so that it holds your greatest hopes for future life.

5. Make a habit of thinking generously¶

Your life will be better when you give some amount of money away. It doesn’t have to be much, but build charitable giving into your budget.