Personal Budget Tips

According to Rob Berger, spending less than we make is often cited as the most important personal finance goal. It helps us get out of debt, save for emergencies, and stash money away for retirement. It’s the primary habit that enables us to achieve some level of financial freedom that we desire as a working class.

For an effective personal budget, there is the need to understand the goal of budgeting.  The goal of a budget is to help us control our spending so that we can spend less than we make and focus on how we can achieve what matters most to us. 

It is advisable to also track your spending weekly. Tracking can provide valuable information about your spending patterns and help you put the right measures in place. An effective budgeting method is the 50/20/30 plan as popularized by Senator Elizabeth Warren in her book, “All Your Worth”. This approach to budgeting benefits from simplicity. With this plan, 50% of income goes to necessities, 20% to long term savings, and 30% to lifestyle choices. This plan can be a good starting point for those struggling to decide just how much they should spend on individual budget categories.

Remember that the goal of budgeting is to spend less than we make (i.e., to save money). One of the best ways to do this is to save first. Rather than saving what is left over at the end of the month, save first and spend the rest. This strategy takes advantage of behavioral finance. By getting money out of your checking account and into savings first, we are less likely to spend our savings during the month.

Another important tip to help you budget effectively is decide ahead of time what you’ll use each pay cheque for. Ask yourself: Have I allocated money for my necessities (housing, food, utilities, transportation, etc.)?

Finally, using the right tool can make budgeting more effective and less painful. There is no single best budgeting application. What works best for one person might not work best for somebody else. Yet, there are several great budgeting tools that are either free or quite inexpensive. Some of these tools may link directly to your bank account and credit/debit cards to automatically download and categorize transactions. They also come with smartphone and tablet apps, and they provide valuable insights into how your money is being spent.

So, if you do not practice the concept of budgeting already, try it for one month and share your experience with us and other readers. And if you are already practicing it, kindly share your experiences with us to encourage the newbies.


  1. Petra Trust provides pension trustee services, provident fund management, and scheme administration services.
  2. Petra also offers a voluntary tax-advantaged savings plan that individuals in both the formal and informal sectors can capitalize on to plan towards achieving their goals.
  3. Petra Trust’s leadership has over 60 years of combined world-class experience in managing institutional and sovereign funds in excess of 500 billion USD.