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A budget is the first step to financial wellness. Here’s how to get started

Taiwanese ethnicity man looking at the home budget and sorting out bills using his laptop in his cozy living room

SrdjanPav | E+ | Getty Images

If you’re trying to get control of your finances, most financial advisors will start with one simple step: establishing a budget.

The coronavirus pandemic and ensuing economic recession and recovery has made a budget more important for many Americans. Some 80% of those surveyed in 2021 have a budget, according to, a 12% jump from 2019.

Having a budget or spending plan is one of the first steps towards financial wellness because it acts as a guide for your money.

“I look at budgeting as being the principal thing in order to help you get from financial point A to financial point B,” said Frederick Standfield, a certified financial planner and founder of Lifewater Wealth Management in Atlanta. “It’s going to inform some critical decisions.”

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It’s important for everyone to have a budget, regardless of how much money they make, according to Tania Brown, a CFP and coach at SaverLife, a nonprofit focused on helping low-income Americans save.

“A budget tells your money where to go and what to do so that you can have the life you want,” she said. “The less money you have than the more critical it is you prioritize where that money goes.”

How to make a budget

The first step in creating a solid budget is to define your financial goals, experts say. Financial advisors recommend different ways of doing this, such as thinking about your big picture goals or identifying your core values.

Once you have a clear picture of what you’re trying to accomplish, you’ll need to take a financial inventory of where you are, including income, expenses and any debt. Then, you’ll take your monthly salary and allocate parts of it to your essential expenses first, then your financial goals. If you still have money left over, you can apply it to spending in more fun categories, such as travel or eating out.

If you don’t have enough income to cover all your wants, needs and save for long-term goals, you may have to cut back on spending or consider a longer time frame to save. These choices help shape your financial plan.

“Making a conscious decision on how much to spend, how much to save and what to reduce or let go provides tremendous direction,” said Jerel Butler, a CFP and founder of Millennial Financial Solutions in New Orleans.

Once you’ve determined a budget, the next part is automating parts that you can, such as paying bills and saving, and tracking your spending.

There are many ways to do this, from using a simple spreadsheet to using an app such as Mint, Personal Capital or You Need a Budget (YNAB.) What’s important is finding the money-tracking method that works best for you so that you’ll continue to use it.

Set yourself up for success

To be sure, some people will struggle to stick to their budget, especially at first. There are a few things that can help you get back on track.

The first may be changing your mindset about budgeting in general, according to Julie Quick, a CFP and founder of Cultivate Financial Wellness in White Lake, Michigan. Instead of using the word “budget,” which she says people associate with the financial version of being on a diet, she helps cli