Welcome to Ask Lacey, an advice column in which accredited financial counselor and MilMo founder Lacey Langford answers your pressing financial questions. Have a question for Lacey? Submit it here.
Dear Lacey: I've tried budgeting before but struggled to maintain it. How can I make a budget that I'm more likely to follow and stick with?
Thank you for the great question! If you’ve tried budgeting before but found it difficult to stick with, you’re 100% not alone. Military-life curveballs such as mobilizations, an unplanned permanent change of station (PCS) or unexpected moving costs make budgeting feel like herding cats. Everyone starts with good intentions, but even the most disciplined can lose momentum when changes in your expenses or income keep popping up. The key is to make a plan that fits your life, keeps you motivated and is easy to manage.
Here are some steps to build a budget you’ll stick with:
First, change the way you think about budgets. They’re not about restricting your spending. They’re a tool to help you gain control and confidence with your money, to afford what you want and take advantage of opportunities such as buying a new car or starting a business after the military. You’re aligning your spending with your goals. Reframing how you look at budgets makes it feel like less of a chore and more empowering.
Start by understanding your current habits. Review your income and expenses for a month. I’m talking about every Starbucks run, subscription or Target haul. An easy way to see your transactions is by printing or downloading the last three months of your bank statements. The goal is to gain an awareness of your income and spending. No judgment, just clarity. Once you see where your money’s going, you’ll spot patterns and areas you can adjust or eliminate when building out your budget.
Next up, set realistic goals. Why do you want to budget? Is it to pay off debt, save for a trip or retire early? Anchor your budget goals to a purpose that excites or motivates you. Don’t be vague. Make your goals specific. If your goal is to build an emergency fund, say, “I want to save $1,000 in the next 12 months.” Then break it into small, achievable steps. For example, to save $1,000 in 12 months, “I will transfer $83 per month into my savings account.” Having specific goals with clear actions makes you feel progress early on.
Now, decide on a framework your budget will follow. If you don’t know where to start, the 50/30/20 rule is a great guide. Fifty percent of your income is for necessities such as a mortgage or groceries, 30% is for wants such as eating out and entertainment, and 20% is for savings or debt repayment. Let’s say you want to save and invest more. You can make it 50/20/30.
For the next part, where will you actually “budget”? You can use apps, spreadsheets, a notebook or even your iPhone notes to maintain your budget. The place doesn’t matter so much. What matters is that it’s in a place you’ll use and are comfortable with. If you’re not confident with fancy apps or complicated spreadsheets, a notebook will work.
Start by listing your monthly take-home pay (after taxes). Then write down your must-haves, including rent, utilities, groceries, car payments and insurance. As a guide, it should be about 50% of your income. What’s left is money for building up savings, paying off debt and buying things you want. With your framework in mind, you can now prioritize how you will allocate your money. Beware of being too austere and rigid. Completely cutting out anything enjoyable such as eating breakfast out or weekend movies often backfires and is where people abandon their budget.
You want every dollar of your take-home pay to be spoken for. Subtract necessities, wants and savings from your total take-home pay. If there is a positive number, look back and see where to put that money. Can you budget more for your monthly savings or make a larger credit-card payment? Remember, every dollar needs to have a place it’s going to.
As a financial coach, I see people’s top mistake is not accounting for irregular expenses. Those things don’t happen every month, such as gifts, oil changes or your Amazon Prime membership. Forgetting about them will mess up the budget you’ve built. Review your past year of expenses to help identify the irregular ones and get them in your budget. You can also create a miscellaneous line to set aside money for when unexpected things happen in life.
After it’s all done, don’t forget about it. Put it into action and check in regularly. It doesn’t have to be a big daily project. A weekly 10-minute review will keep you on track without feeling time-consuming. If you get off track, don’t abandon your plan. Think about what happened and make adjustments.
The secret to building a budget you’ll stick with is to make it yours, be practical, focus on your goals and have flexibility. It’s about making progress, not being perfect. You’ve tried before, so you’ve got the foundation. Now, you’ve taken that foundation and added in new intentions and framework to help it go the distance!
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