Adulting is hard. But one of the easiest things you can tackle is to create a personal budget for your finances.

Why Create a Personal Budget?
The most important thing to do when it comes to saving money is to have a plan. Maybe you want to make home renovations, get out of debt or take that dream vacation. Without a plan, it’s human nature to increase your expenses to match your income. Whether that be over the course of a few weeks or a few years, your money will find places to go that are not your savings. That’s why the first thing you should do when you receive a paycheck is to automatically send a cut to savings – pay yourself first. This habit, once you get used to it, will allow you to circumvent the urge to increase spending until you can’t anymore.
How To Track Your Spending
First things first, you have to figure out where all your money goes. There are a bunch of ways to do this, so if you already have a tracking system in place, feel free to skip this section. If not, read on for some options, and when you get to the end, pick one, or come up with your own.
I have a friend who saves every receipt for everything they purchase in a shoebox and then reviews each and everyone one at the end of the month. Personally, I think this is a bit extreme, but to-each-their-own I guess. However, seeing all those receipts makes the spending seem a lot more real, and if you’re buying a bunch of small trinkets that you don’t really need, the shocking amount of paper in your shoebox at the end of the month may be just the reality check you need. Not a great long term strategy for most, but it works great as a thought experiment, and if you know that you have huge changes that need to be made, you may wish to do this the first month just to see how out of control you really are.
Personal Budget Spreadsheets and Templates
The most straight forward way to track is by hand in a spreadsheet. There are plenty of online templates you can find and download depending on what metrics are important to you, with the added bonus of gaining a ton of hands-on experience with your data. This is a great strategy for people who have already taken care of the basics like canceling subscriptions that aren’t being used and limiting impulse purchases. While sifting through all your credit card bills and recurring costs, even if you thought you were doing well you might find yourself thinking “wow, I didn’t know I spent this much on eating out” or “holy crap, I spent more on a weekend vacation than I did on rent in July.” These are good kick-off points to bring your finances under tighter control and create your personal budget that aligns with your financial goals.
Google Sheets has a monthly budget template and an annual budget template and access to these is part of a Google Account. The default Macintosh and iOS spreadsheet application Numbers has several personal finance templates including Simple Budget, Personal Budget and Personal Savings. Microsoft Excel has Personal Budget, Family Budget and Manage My Money templates.
Online Applications
The final option would be to use an online application that specializes in creating budgets. There are a ton of them out there, but at the time of writing this, the two most popular are Mint and YNAB (You Need A Budget). On iOS definitely give CoPilot a look at $8.99/month or $69.99/year.
Mint is free and does everything for you. Personally, I use this one and would recommend it to anyone. I really like how simple it is, you hook up to all your credit cards and accounts and then the app basically just tells you where your money is going. You probably won’t spend as much time really getting to know your dollars, but for those who are lazy, this would be a much better choice then not accounting for your money.
YNAB costs $11.99 a month but forces you to account for every dollar, which I see as a benefit because once again you are forced to see where your spending is going. It hooks up to your financial accounts the same as mint. I personally have not used it since college (it’s free to students) but as one of the most popular budget apps out there, there are plenty of online reviews backing up its effectiveness.
Once you have a monthly snapshot of your spending, look for areas that you feel have too much fat on them, and be honest with yourself. Did you and your significant other really need to spend $800 eating out at restaurants last month? Why are you spending 45% of your income on rent? Did you really need to buy four $60 PS4 games last month, 3 of which you still haven’t even played? Try to get to a point where you’ve freed up at least 20% of your income since that’s where you’ll really start seeing tangible savings in a realistic time frame to keep you motivated. If you think you can go for more, then go for more! Just don’t go too overboard at first or you’ll burn yourself out and ditch the budget completely. It’s better to save a little each month than a bunch for a month and a half and then not saving anything else afterward.
When to Start your budget? Now.
Once you’ve identified the areas that need a trim, create a budget that reflects your sentiment. Then start IMMEDIATELY working toward your goals and create your personal budget. This doesn’t mean you have to become extremely frugal overnight, but at the very least you need to start moving in the right direction. Attack the most superfluous areas, and once the easy stuff is gone, try incrementally decreasing spending each week or each month.
The longer you wait to create your personal budget, the less likely you are to implement your budget. Over time the things that comprise your budget will change, and your financial plan may be completely worthless to you a year from now. Plus, the earlier you start saving, the more time your money can compound!
Once you start saving, and especially if you don’t have past experience with saving, you will want to spend that money really badly. It will be burning a hole in your pocket, so try keeping the money in an account you don’t check as often. In the book A Million Bucks By 30 the author completely hides the account from himself and only checks it once a year. This is extreme, but if you find yourself constantly dipping into your savings for unnecessary expenses, you may want to consider it.
Remember, this is the most difficult step. Once you put in the legwork at the beginning, things become much more passive and you’ll be saving on autopilot. Soon enough, you won’t even think about the money saved each time you receive a paycheck.
Smooth Sailing Ahead.
Once you cut back to a level that meets your financial goals, your focus is to maintain. When you get an end of year bonus or a raise, don’t splurge on a new car or fancy multi-week cruise through the Caribbean, get ahead on your financial goals, because just as life has windfalls like these, you will also experience setbacks that can get expensive quickly. When something unexpected happens, you will be prepared. If someone you care about gets sick, a friend has a destination wedding, or your car breaks down, the peace of mind knowing that you have the funds to cover it will be priceless.
Mind you, this all should be AFTER already putting a percentage into a retirement account. Since you don’t pay taxes on that money, you get a better real rate of return per dollar used. Plus, social security has a shakey future at best. Don’t let children or a government stipend be your “plan” for retirement because neither of these things are certain, but a hefty 401k is about as close to certain you can get.