How to Cultivate a Budgeting Mindset in 4 Easy Steps -

Last updated Mar. 5, 2023 by Peter Jakes

Do you want to take a little step toward bettering your financial situation? Make and stick to a budget. Budgets (sometimes known as expenditure plans) are plans for spending and saving future earnings. In this article, we will answer the question of how to cultivate a budgeting mindset in 4 Easy Steps.

The purpose of budgeting is to forecast future revenue and expenses to achieve positive cash flow (income exceeding expenses, including savings for future goals as a fixed “expense”). Creating and sticking to a budget necessitates tracking, recording, and modifying expenses, as well as human attributes such as discipline, motivation, and sacrifice (i.e., spending less today to save for the future).

The term “budget” appears in health and nutrition literature and recommendations. People can use an online Calorie Calculator to determine a daily calorie “budget” depending on their age, gender, height, weight, and degree of exercise.

For example, if a calculator indicates you need 1,582 calories to maintain your weight, consuming 1,382 will result in a pound loss every week. Earning $75,000, budgeting $68,000, and saving $7,000 is equally financial examples.

YOU Are in Charge of Your Budget!

To cultivate an effective budgeting mindset, you must realize that you are the one in charge of your budget. You rule your money, income, and expenses, and they don’t rule you.

If you think budgeting will hold you back and make you feel like you’re not living exactly the way you want, you need to change your mind. Your desire to be in financial control of your life has to be internally driven.

Cultivating a budgeting mindset means you just really want and see the need for budgeting. You shouldn’t think that your budget is in charge of you. Instead, you should be in charge of your budget. The thing is, you decide what goes into your budget.

You can go to the mall and spend money on too many toilet papers to count (I’m guilty of this)! All you have to do is plan out how you will spend your money ahead of time and stick to that plan.

Budgeting is Personal, not Relative

This article takes time to explain these timeless truths because knowing them is important to cultivating a budgeting mindset fast. It’s easy to compare your financial condition and that of family members, friends, or coworkers.

Budgeting comparisons might lead to sentiments of shortage, envy, and despair about your financial situation. Consider your personal financial goals regarding yourself, not in proportion to what you perceive in others.

Your budgeting should be about you not concerning others. Unless you have a partner who is part and parcel of your spending. Then cultivating a budget mindset together with your partner becomes ideal.

You may be envious of someone driving the latest car, but you may not realize they are just scraping by to make the payments every month.

However, comparing your situation transforms your mentality from being grateful for what you have to be insecure about what you don’t. Consequently, this will affect both your budgeting and money mindset.

Money is personal, and it is better to keep it that way to avoid a negative change that will undoubtedly damage your financial condition or goals.

Related: 21 Ways To Make Budgeting Fun

Developing a Budgeting Mindset

This comprises establishing general spending limits and determining how to live within your budget. The most common strategies are to increase income, decrease expenses, or do a little of both. Make a detailed record of everything you make and spend. Household earnings include:

Net (after-tax) income
Benefit payments (e.g., Social Security, unemployment, disability)
Child support or alimony
Public assistance
Self-employment income,
Interest on savings and investments, and
Other income sources.

Budgets may be dicey; you either love or hate them. Many individuals despise the word. It is often because they are anxious about living over their means and are aware that a budget would show this. They are not yet ready to face their truth. Allow me to alleviate your financial concerns and show you how to make one work for you.

How to Cultivate a Budgeting Mindset in 4 Easy Steps

Step 1. List Out the Reasons Why You Need a Budget

If you don’t understand why you need a budget, you can start budgeting, but you may never follow through with your budget. A budget forces you to map out your goals, save your money, keep track of your progress, and make your dreams a reality.

Cultivating a budgeting attitude allows you to identify and work toward long-term goals. How will you ever save enough money to buy a car or place a down payment on a house if you just float aimlessly through life, hurling your money at any attractive, sparkly object that seems to catch your eye?

Hence, it is very important that before you start effective budgeting, take time to write down at least 5 reasons why you want to budget. If there is no purpose to your goal, you just may not reach the finish line.

If you feel you are overusing or abusing your credit card, this is a big reason to start developing a budgeting mindset.

The reason for developing a budgeting mindset is, that if you cultivate a budgeting mindset that has become a part and parcel of you, You’ll know exactly how much money you earn, how much you can afford to spend each month, and how much you need to save.

These days, people who overuse and abuse credit cards don’t always realize they’re overspending until they’re drowning in debt. However, cultivating a budgeting mindset will never have you finding yourself in such a precious position.

Step 2. Confronting Obstacles That Cause Budgeting Failure

A lot of times, it’s easier to start budgeting, but consistency is where we fail. Have you ever noticed that you have tried budgeting but didn’t get through to the third week? One of the ways to tackle these hindrances is to pick out your budgeting obstacles first, work on them, then start again.

If you were to fail at budgeting, what would be the cause? Unexpected expenses? A lost job? Your favorite department store? Vacations you can’t say no to? Eating habits?

Spend the next few minutes jotting down any obstacles that can derail your budget to cultivate a budgeting mindset. Don’t hold anything back. Write it down if it has the potential to throw you off your budget.

Don’t forget about the exclusions. Check out these issues that impede good budgeting to help you write down what you believe prevents you from efficiently budgeting your income.

Let’s now connect each issue with a strategy for overcoming it. Here are a couple of such examples:

For example, if you have a habit of overspending on luxuries or buying in bulk even when you don’t need it every month, you can arrange to bring your budgeted amount of money for groceries, in cash, to the store every time you go, while leaving any other form of payment at home. Budgeting disaster averted.

Budget Obstacle No1:

Almost every time I have a house party, I spend more than I should because I can’t say no to my friends. You can write this on a sticky note and stick it somewhere in your living room that everyone will see.

At some point, you’ll have to deal with the problems you’re having with your budget. Better to control them before they even show up. But that’s only what I think.

Budget Plan: I’ll start calling in sick or say no one out of every two weekends when I’m supposed to go out with friends or watch a movie (might sound ridiculously funny but you have to come up with something that will make you spend less, till you have grown into the budgeting mindset).

I will also make certain that I have finished my stock before replenishing a new product, and that the money for the item is always within my budgeted amount. For example, I will not spend more than $10 on toothpaste.

Budget Obstacle 2:

Because I am prone to forgetting things, the prospect of having to remember to record daily expenses in the budget daily could throw me off track.

Budget Plan: I’ll create a daily reminder on my phone to remind me to spend 5 minutes working on my budget every evening when I get home from work. Not only that, but I will make it a point to write down all of my daily costs before going to bed every night. That is to say, no budgeting, no sleeping.

Budget Obstacle 3:

I make a lot of money, so I don’t think I need to budget because there is always money coming in. Also, even though I know I need to budget, I am not interested in doing so, and I am scared that this will be my budgetary downfall.

Budget Plan: I’ll ask my partner or a family member to be my accountability partner, reminding me to write down my costs and putting sticky notes with my “compelling reason why” in apparent areas where I won’t miss them. That way, I’ll be forced to recall the fundamental purpose of my budget.

Step 3: Deal with Money Emotions

Seeing Patterns in Your Money Emotions is one method for quickly cultivating a budgeting mindset.

You may see patterns as you learn to identify and connect with your money emotions.

Perhaps you have a financial concern when your boyfriend has his monthly night out with pals because he rarely sticks to the budget and puts the family in a bind.

Alternatively, you may discover that working on spending less on food triggers a strong dread of not having enough. Growing up, your family didn’t always have enough food, and cutting back, even though your new reduced budget is more than enough, is frightening. However, shame and fear are less potent in the light of day.

Your Emotions Affect Your Budgeting

Giving your emotions room and attention is a lifetime exercise in and of itself. Many of us struggle with it. Especially in a world where it appears that the norm of being okay is to be pleased 100% of the time.

However, by exercising emotional awareness when handling money, we can continue to learn and progress. We can recognize when old stories are preventing us from reaching our full potential or feeling secure.

We’ll be able to let go of the past and create new patterns that will better serve us.

We just need to make the procedure a little more enjoyable. This leads us to our final step. Have you already decided what financial goals you want to achieve? While goals are vital for financial success, it is also critical to keep your emotions and goals in line.

This implies that we all require an emotional motivator to keep us inspired and motivated to take action to achieve our objectives.

It is not enough to wish to be affluent at a specific age. Plan to invest in real estate over the next two years instead. Or fantasize about a luxurious retirement. When setting goals, keep your emotions in mind. This is when the question “why do you want to achieve these goals” enters the picture.

Step 4: Set Yourself Up For Success

Some people will find it hard to stick to their budget, especially at the beginning. You can get back on track by doing a few things.

The 4th step might be to change the way you think about budgeting in general. Instead of using the word “budget,” which she says makes people think of “financial dieting,” she helps clients come up with a plan for how they will spend their money.

The idea is the same—it’s a plan for spending and dividing your money—but using different words makes people feel more in charge and less like they’re being limited.

We can’t tell you how to spend your money; only you can decide that. But it’s up to you to figure out what’s important to you and spend your money on that. Brown also said that you could try a new way to make a budget or keep track of how much you spend.

If using an app that tracks your spending all the time is too stressful, you can try something else, like doing a monthly check-in with your spreadsheets.

Experts also say that making a good budget usually takes a few months because people initially forget some expenses or think they’ll save more money than they will.

The best way to deal with this is to be easy on yourself at first and set yourself up for success by setting goals that you can reach, at least for the first few months.

For instance, if someone wants to save $100 a month, she might suggest they start with $50. When you meet or beat a goal, it gives you the drive to keep going.

Optimize Your Budget for Happiness

It is not easy to master your money mindset. However, adjusting your budget to incorporate items that make you happy will make it a bit simpler.

If going to the gym or going out to dinner makes you happy, make room in your budget for these activities. Budgeting will become less of a chore if you do not feel deprived.

When budgeting, a good rule of thumb is to allocate 50% of your earnings to necessities such as housing, food, gas, and medicines, 30% to desires such as vacations and finally learning to play an instrument, and 20% to savings. If you have debt, the 20% could be used to pay it off first.

Tips for Cultivating a Budgeting Mindset

Inform Yourself About Money

Finally, if you want to have a positive attitude toward money, educate yourself on the subject. Surround yourself with individuals who share your values, read books that promote positive thinking, and make sure your social media feeds do not promote negativity about money and spending.

Read Books

How you feel about money has a direct effect on how much money you have. Even though your parents and other people have taught you some things about money, the good news is that you can change the way you think about it.

The key is to constantly fill your mind with new and positive information that will teach you how to think about money in a whole new way. Money mindset books teach you how to spend money wisely and make a budget, which is both important parts of training your money mindset.

Gain Inspiration from Quotes

Putting up motivational and helpful quotes around you will help you get into the right money mindset. Look for quotes that make you feel good about yourself and your spending, and save them to your phone, or computer, or print them out to keep around the house.

Follow Financially Successful People

Maintain contact with successful individuals. Following successful people on social media, through a blog, or through reliable news channels will motivate you to greatness.

These people do not all have to be public figures. Only seek guidance from individuals who have already accomplished what you wish to accomplish.

These individuals may be family members, coworkers, mentors, or financial influences. In any event, following in the footsteps of someone who is already successful and has a positive money mindset is much easier.

Change the Way you Think About Money

I once told a close friend that I was concerned that I wouldn’t be able to support Inspired Budget full-time. This was a significant confession for me to make because it contained all of my insecurities and fears.

She sat across from me at breakfast and said something I’ll never forget. Her remarks made me realize that there is enough money in the world for you. All you need is an abundance mindset.

Wow. It was unbelievable to me. I was fooling myself into believing that I always had a positive view or a terrific mindset when, in fact, I had such limiting notions. I’m grateful she pointed it out to me because having an abundance mindset is incredibly liberating.

Instead of stating, “I don’t make enough money,” say, “There is enough money for me.” “I am a money magnet.”

I’m a great believer that if you think about something over and over again, it will get imprinted in you. Begin changing your mind right now. Confront your negative beliefs about budgeting and money. You’ll be shocked at how quickly it becomes a natural habit!

Tips to Master and Grow Your Money Mindset

With the five steps below, you can master your money mindset and go from scarcity to abundance.

Step 1: Reflect on your Financial Perspective

Before you can make any changes in your life, including your finances, you must first reflect on your past to discover how it has influenced your present. Consider your financial experiences up to this point:

How did you grow up?
What lessons did your parents teach you about money?
What financial messages were implanted in you at a young age?
Did your parents/guardians spend or save?
Did your parents/guardians struggle with money or did they have an easy time of it?
What was their financial situation like?
How did you handle your own money as you grew older?

Consider everything that has influenced your current perspective on money. But keep in mind that this isn’t the section where you blame your parents for all of your financial missteps and negative money mindset. Yes, the adults in your life have an impact on how you perceive money today, but just one. Please do not call them after the first step.

Step 2: Adopt a Positive Money Mindset

Financial affirmations can help you change your financial mentality and adopt a positive money outlook. The way you say to yourself has a major impact on how you deal with money. Take note of what you tell yourself when:

You get wealthy (like from your salary, bonus, promotion, an unexpected windfall, etc.)
You apply that money to necessary expenses (like bills, food, healthcare, transportation, etc.)
You blow it on self-described splurges.
You commit a financial error.
You converse with or spend time with others around you.

If you find yourself engaging in negative self-talk in any of these scenarios, it’s time to rewrite the script. How can you alter the way you speak to yourself to make it more positive? Here are some examples of money mantras:

“I’m never going to receive that promotion.” ➔ “All I can do is ask and demonstrate my worth.” I’ll try again in six months if they say no. “I am aware of my worth.”

“I’ll always live paycheck to paycheck.” “I can rework my budget so that I’m more comfortable with my expenses and don’t feel so depleted at the end of the month.”

“I’m a financial failure.” ➔ “Everyone makes errors, and I’ll utilize this as a learning experience for the future.”

“I’ll never be as wealthy as my pal.” ➔ “Everyone is at a different stage of life, and there is no right or wrong place to be.” Everything is relative. “I’m exactly where I’m supposed to be right now.”

Step 3: Shift your Mindset to Save Money

Next, take a moment to think about your values and goals regarding money. These will help you figure out how to spend and save your money.

What matters to you, and where do you want to be in one, five, ten, and twenty years? Write down these financial goals and values to remember them when money is hard.

Now that you know what your goals are, take this chance to explain them more clearly. How are you going to get them to happen? How do you get there? Get down to the details if you want to feel like you can reach your financial goals.

Step 4: Monitor your Spending

Monitoring your expenditures for at least a month is the greatest approach to learning more about your money and how to improve your money perspective.

This involves keeping an eye on your emotions as you manage, spend, and save money.

When you get paid, how do you feel?
How do you feel when you pay your bills or spend money?
When you spend money on yourself or others, how do you feel?
What are your spending motivators?
To get started, download our free Weekly Money Diary!

Step 5: Commit to Changing your Money Habits

Now that you’re ready to change the way you think about money, it’s time to put in the work and change your money habits. Here’s your chance to learn more about how to handle your money.

Read about the success of people who overcame money problems, like Ryan, who paid off $9,200 by changing the way he thought about money. Commit to learning more about your money through books, podcasts, blogs, online courses, workbooks, videos, and other resources.

This will help you change the way you handle it. How can you make a new budget that matches your new way of thinking? How do you put this new way of handling your money into action?

Budgeting vs. Going with the Flow

Not everyone needs to plan out how they will spend their money each month. Most people would rather just let things happen. They find budgeting boring and hard to do. Yes, they know when it’s time to pay the rent or buy more food.

But they don’t care much about keeping track of where their money goes each month. They only know that money came in and money went out. They can’t figure out the exact amount.

On the other hand, some people like to keep track of where their money goes each month. When they get their monthly pay, they split it into different amounts to pay for transportation, groceries, eating out, entertainment, and so on.

At the end of the month, they can see where they spent more or less than their budgeted amount.

Making a budget is a great way to keep track of your money, but you need to make sure it’s realistic. Unrealistic budgets could mess up your life and make your finances worse instead of better.

Bottom Line

When it comes to accomplishing personal and commercial goals, money is often used as a barometer of success. Because the money mindset is essentially your attitude toward money, maintaining a positive attitude about money is critical for general success and well-being.

To reach full abundance in your life, you must free your thoughts of all limiting ideas that hinder you from taking action and then begin viewing the world through an opportunistic lens.

If you want to develop a positive attitude toward money, here are some concrete actions to take.

Frequently Asked Questions

Q: How do you develop the right money mindset?

The Four Steps to Creating a Positive Money Mindset

Forgive yourself for your financial mistakes. You might as well be a financial master if you have never missed a credit card payment or bill.
Set financial objectives.
Make the Most of Your Money for Happiness
Educate Yourself on Money.

Q: What are the seven steps to budgeting?

7 Simple Steps to Creating a Budget

Step 1: Establish Realistic Goals. Setting financial goals will help you make wise spending decisions.

Step 2: Determine your earnings and expenses.

Step 3: Sort your wants and needs.

Step 4: Create Your Budget

Step 5: Implement Your Strategy

Step 6: Seasonal Expenses

Step 7: Take a look ahead.

Q: What are the qualities of a good budget?

The following are the characteristics of the best budgets:

Has been measured over time versus actual spending actions (tracking).
It is feasible in your situation.
Allows for savings, particularly in the event of an emergency.
Assists you in working toward set goals.
It has “rewards” built in so you don’t deprive yourself.

How to Cultivate a Budgeting Mindset in 4 Easy Steps

YOU Are in Charge of Your Budget!

Budgeting is Personal, not Relative

Developing a Budgeting Mindset

How to Cultivate a Budgeting Mindset in 4 Easy Steps

Step 1. List Out the Reasons Why You Need a Budget