You are a very unusual person. You saw the word "budgeting" in the headline and yet kept reading! To reward you, we present six ideas for getting the most from this powerful — yet much maligned and misunderstood — personal finance tool.

  1. Choose your words carefully.
    Have you ever heard someone say they're on a budget? That's the same way people talk about their quest to lose weight: "I'm on a diet." No wonder budgets and diets are so disliked.

    Let's set the record straight. A budget isn't something you go on. It's a tool you use.

    Another word to be careful about is "less," as in, "I'm trying to spend less by going on a budget. Anyone motivated by that?

    A budget is not about less. It's about more. It gives you more information about your finances so you can be more intentional about your use of money so you end up having more for the things that really matter most to you.

    Perhaps most importantly, don't call your budget a budget. Call it a cash-flow plan.

  2. Choose the best tool for you.
    Once you've cleared the hurdle of deciding to use a cash-flow plan, the next challenge is figuring out how to go about it. (You’ll find a free Budget Quick-Start Guide, forms, and even recommended spending guidelines on our tools page.) You could write your plan on a piece of paper, use the envelope system, create an Excel spreadsheet, buy a software program, or try an online tool. The best cash-flow plan tool for you is the one you'll actually use, so choose the one that seems simplest to you.

    If you've never used a cash-flow plan before, start with a paper-and-pencil tool or the envelope system. Only a shallow learning curve is involved, and it's helpful to use such hands-on systems at first. Six to 12 months down the road, feel free to move to an electronic system.

  3. Keep it current.
    One common reason people quit using a cash-flow plan is they get behind on recording their spending, can't remember what they spent, get frustrated, and give up. If that happens to you, just make some estimates as to what you've spent recently, determine to do better in the future, and keep moving forward. Then make a note on your calendar each day to record your spending until it becomes a habit.

    If you're using a paper-and-pencil plan, keep it where you'll see it. Don't tuck it into the bottom drawer of a dresser in your basement. Put it on your kitchen counter or your nightstand. Keeping it visible will remind you to keep it current.

    If you're using an online tool such as, it'll record all electronic transactions for you. Still, log on once a day to enter cash transactions and make sure it has categorized your electronic spending correctly.

  4. Plan for maintenance and repairs.
    Big, unexpected expenses can be cash-flow plan killers. Maybe you've been humming along, staying within your grocery, clothing, and entertainment spending targets when all of a sudden you have to pay for new tires for your car. In an instant, your cash-flow plan turns upside down. But it doesn't have to be that way.

    Depending on the age and condition of your vehicles, plan to allocate $75 to $100 per month per vehicle for maintenance and repairs. Some months you won't spend anything, but other months you'll spend a lot. By having money allocated to maintenance and repairs each month, you'll end up having enough money set aside for the big-expense months that happen to all car owners.

    Do the same for your home. Plan to allocate at least $200 per month for maintenance and repairs.

  5. Remember who's in charge.
    While a cash-flow plan is a helpful form of accountability, ultimately it's a tool that's supposed to serve you — not the other way around. You have the discretion to change your plan, and you'd be wise to do so in certain situations. Maybe month after month you keep spending more on groceries than you planned. Definitely look for ways to bring your spending in line with your plan. But also be willing to consider that your plan may be unrealistic. Of course, spending more on groceries means you'll have to spend less in other categories, but this process of making adjustments is a normal part of using a cash-flow plan.
  6. Get on the same page as your spouse.
    With most couples, one spouse usually takes to the mechanics of a cash-flow plan better than the other. Put that person's strengths to work by having him or her be the one to enter transactions. That doesn't absolve the other from responsibility for the plan. Both spouses should be on board and accountable for managing to the specific numbers within the plan. But having the more detail-oriented spouse handle the nitty-gritty can help keep both of you on board.

If you're new to the process of using a cash-flow plan, be patient. It usually takes time to get in a rhythm of keeping track of your spending and figuring out the correct amounts to allocate for each category. Stay with it. People who use a cash-flow plan usually find it's not the ball and chain they imagined. It's a tool that gives them a great sense of freedom and control over their finances.