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Personal Finance: Tips for Budgeting

There’s a fine art to a lot of things. Conversation. Parenting. Or, you know, art. But one that takes an awful lot of practice to do it the right way is budgeting. When it comes to managing your personal finances, there are plenty of rights and wrongs.

Here are a handful of things to keep in mind when mastering budgeting.

Set a Schedule

The first thing to bear in mind when setting up top-notch personal finance goals is to get your hands on a calendar. This can be multi-purpose—it can include setting dates as reminders for when you have bills due on a recurring or one-off basis and it can help you better materialize your long-term goals into incremental smaller ones. Say you’d like to have $10,000 in your savings account in the next five years—divvy up your pay periods to determine how often you’ll need to stash away some funds and how much of it on a monthly, quarterly or annual basis.

When it comes to personal finance, timing is everything.

Know Your Worth

One of the often-overlooked pieces of personal finance is net worth—it’s the ratio of your assets to your liabilities. Essentially, it’s the amount of difference between your money in the bank and high-value things you own, weighed against your debts. The value of knowing your net worth is to determine how credit-worthy you are when it comes time to borrow for major purchases like vehicles or houses. If your net worth is negative or close to even, your priority should be paying down high-interest debts like credit card balances or, to a lesser extent, student loans.

When you net worth grows, your financial freedom grows with it.

Be Realistic

One of the fatal flaws of many budgeters’ plans is a lack of realistic allocations. It might sound great on paper to limit yourself to $10 in restaurant spending in a given month, but if you’re prone to eating out or it’s a critical part of your day job, for example, you might be setting yourself up for failure. Take stock of how you’ve spent your money over the past three months—find the average amount you spend in key areas such as utilities, necessities, food, entertainment, etc. Set your budget parameters based on actual figures and prioritize goals for spending less or more in certain columns over time.

Make your first spending habit goals achievable—motivate yourself for loftier ones in the years to come.

Prioritize Interest

In today’s world, most people carry a few different debts—whether it’s a personal loan, an auto loan, a mortgage or school loans. And while you should always pay the required minimum each month, when you have room to overpay on debts to get ahead, make sure to prioritize based on interest rate. Say your student loan carries a 6.5% interest rate and your credit card balance carries a 25% interest rate. In this scenario, it would be smarter to put extra cash on hand toward the latter to reduce your total interest paid over time.

Take stock of where you’re incurring the most interest—those are target areas when you’re experiencing an asset surplus!


When it comes to smart financial decision-making, you won’t find a better team to have in your corner than Levo. Talk to our team about your savings goals, your borrowing needs and much more.