Money in a jar sitting on a table

How to stay on a budget

Back to Financial Education

5 steps to commit to better monthly budgeting

An effective budget plays a critical role in reaching your financial goals. A healthy monthly budget can erode debt, build savings and stretch every dollar. But according to FINRA’s 2016 National Financial Capability Study, many Americans aren’t planning for their financial futures. In the U.S., 50% of individuals said that they didn’t have enough in savings to cover expenses for three months if faced with illness, unemployment or economic downturn.

Moreover, a 2016 GOBankingRates survey found that 69% of Americans had less than $1,000 in savings accounts altogether — while 34% said they had no savings at all. Establishing a budget from scratch can seem a little daunting, but it doesn’t have to be hard. Commit to a few good habits and set up a monthly budget to save for the expected — and the unexpected — to achieve financial goals both big and small.

Monthly budgeting tips to save money

  1. Track what you spend.

    Learning how to budget starts with tracking your finances. Keep a close eye on the money flowing in — and out — of your account for at least a month. Itemize all expenses to get an accurate picture of how much you spend on every purchase, no matter how small. This will help determine how to allocate funds to meet your current financial needs. Just try not to be too frugal — too many limitations can set you up to fail. For example, if you get coffee every morning on the way to work, consider scaling that back to once or twice a week and shifting the money saved toward a rainy-day fund.

  2. Establish clear spending priorities.

    Setting aside discretionary income each month is an important part of your monthly budget plan, but a significant chunk of your earnings should be earmarked for the roof over your head. According to the U.S. Department of Housing and Urban Development, about 25–30% of your household income should go toward mortgage (or rent) and utilities.

  3. Don’t overcomplicate things. Stick to a simple monthly budgeting system.

    Make your budget as easy to follow as possible. Financial experts recommend the 50/20/30 rule to keep your budget on track. Set aside 50% of your income to go toward the essentials, such as housing, food, clothing, medical care and transportation. Then, dedicate 20% of your income to savings. The remaining 30% can go toward expenses that enhance your lifestyle (think gym memberships, travel and hobbies).

  4. Aim to pay down the most expensive debt — fast.

    Once you’ve nailed down where your cash is going, shift your focus toward any debt. Pay off the most expensive debt first. Credit cards or loans with the highest interest rates get top billing. Pay more than the minimum payment to start making a dent in the total balance. Pledge to do this month after month, and you’ll see a big difference.

  5. Prepare for unexpected expenses.

    Those stats we covered earlier about Americans’ lack of financial preparedness show that the struggle is real. Just remember that no amount is too small to sock away for rainy days or emergencies. Paying down debt is important, but cash is king. Pay yourself first and consider opening a higher-interest rate savings account to help boost your bottom line.


Monthly budgeting success is an attainable goal. It just starts with a few healthy financial habits. For more tips and advice on how to budget and save money, check out Comenity’s financial resources.

This page and the information contained herein is for educational purposes only. The information is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any product, service or strategy to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any links to other websites are included for your convenience only. Comenity does not endorse any product or service, and is not responsible for the accuracy or reliability of the information, made available through such sites.