5 Tips for Budgeting in the Real World

A woman drafting a personal budget.

Trying to create a budget for the real world can be stressful, but we’re here to help make it easier for you. Budgeting your money will result in you making smart financial decisions and lead to financial success in the long run. We know that deciding exactly how you want to budget your money can be difficult, which is why we’ve put together 5 tips for budgeting in the real world:

1. Decide How Much of Your Income Should Be Spent

The first step to budgeting in the real world is to decide how much of your income should be spent. You’ll need to total the amount of money coming in every month, and then figure out what will be taken out of it. Money being taken out includes rent, utility bills, groceries, student loan payments, etc. The goal is to figure out how much money you’ll have leftover each month after the necessities are taken care of. Rent or mortgage payments, plus your credit obligations, should not be more than 35 to 40% of your gross monthly income. Other monthly payments should not be more than 10 to 15% of your take home pay.

2. Open a Savings Account

saving money in a jarAnother important tip to follow when you’re budgeting is to open a savings account. Any money that is leftover at the end of the month after all your expenses are taken care of should be put in a savings account. Consider setting up automatic transfers to your savings account each month, or have your employer put a portion of each paycheck into that account. It helps if you treat your savings as another fixed expense and automatically know you have to set aside that amount each month.

3. Hold Yourself Accountable

Setting up a budget plan is the easy part — actually following your budget is where it gets more difficult. It’s important to hold yourself accountable for what you spend. It’s OK to treat yourself every now and then when you have money leftover, but don’t make it a habit. It’s helpful if you budget a certain amount each month for variable expenses, such as entertainment, eating out, and shopping, and know that you can’t go over that amount.

4. Cut Down on Small Costs

home coffee makerThe next step to budgeting in the real world is to cut down on small costs. A dollar here and a dollar there won’t seem like a lot at the time, but it will quickly add up and cut into your budget. A cup of coffee every morning can add up to over a thousand dollars every year. Save money by purchasing your own coffee maker or limiting your coffee purchases to once a week. To help cut down on small costs, consider shopping in bulk, packing your lunch for work, and hosting friends at your apartment instead of going out.

5. Take Advantage of Credit Card Rewards & Loyalty Program

It’s also important to take advantage of credit card rewards and loyalty programs, as well as coupons! You’ll be surprised at how much you can save by using coupons and looking into loyalty programs at your favorite stores. Many stores offer discounts to loyal customers that will help you save on your purchases. Tennessee State Bank offers the ability to earn up to 1% cash back on qualified non-pin transactions with their debit card and offers unlimited cash back rewards of 1% on qualified purchases with their Premier Rewards Visa® Credit Card. Click here for more information.

About Tennessee State Bank

Tennessee State Bank has been serving our local community for over 48 years. With branches in Sevier County, Knox County, Cocke County, and Jefferson County, we offer convenient banking services in East Tennessee. Whether you’re looking to open a checking account, obtain an auto loan, or apply for a home mortgage, we make the process as simple and straightforward as possible. Tennessee State Bank’s motto is “Banking at its Best!”SM​, and we strive to live up to that creed every day. Let us know how we can help you by sending us a message via our Contact Form​.

Tennessee State Bank is Member FDIC and an Equal Housing Lender.


“How to Develop a Financial Plan.” ​American Bankers Association,​ https://www.aba.com/advocacy/community-programs/consumer-resources/manage-your-money/develop-financial-plan

“Real World Budgeting Tips.” ​Morgan Stanley,​ https://advisor.morganstanley.com/merlin-wealth-management/documents/field/m/me/merlin-wealth-management/Millennial_Playbook.pdf