How to create an honest-with-yourself budget

I have seen many people create gorgeous budgets and have it fall apart because they set unrealistic goals. When creating a budget it is important that you are honest with yourself. To ensure that it does not fall apart and that you do not fall off the wagon. It is not supposed to feel restrictive if it is then it needs to be redone. If you want to read my other budgeting posts for other tips, like the simple budget and what I cut out of my budget that does not include avocado toast.

We all have things and experiences that are important to use. This is why I do not fully ascribe to the Dave Ramsey Baby Steps. I find it too restrictive for me and when I did try it that way I did fall off the wagon. So, this is from experience.

3 tips I recommend when creating a budget are:

  1. Be realistic – What are your values? What do you find important? Do you like to eat out every once in a while, or buy new clothes? Save for it and create a ‘sinking fund’ in your budget. This is separate from your emergency fund
  2. Create an emergency fund that fits your lifestyle. Is $1000.00 emergency fund realistic for you or does having 3-6 months saved help you sleep at night?
  3. Take into account your 5-year plan. Where do you see yourself in 5 years? Are you on a set contract that will end within that period and you will have to find a new position? Try and prepare for that financially since it is a ‘known’ future expense.

Expect the unexpected and prepare for the expected.

A budget is supposed to help you during the times of expectations and be able to handle the unexpected. Number 3 is only something that I realized recently. As I know the end date of my contract, this means I will have to prepare a move and find a new position. I have an account for this as it is expected

Finally, always remember that there is a reason that personal finance has the word personal in it. Make it to fit you. Your budget should be as unique as you.

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