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How to plan a personal budget?

Updated: Jan 31

The author Małgorzata Sędkiewicz of the article:" How to plan a personal budget?".

Publication date: 12.10.2023

Planning your personal budget is crucial, especially if you want to make the most of your money. This article aims to boost your spending mindfulness, whether it’s for a small purchase like a dress or a big investment like a house or vacation.

You have the freedom to manage your budget as you see fit, but we’re here to offer some helpful tips on planning and saving. So, let’s dive into the world of managing your finances!

Decide what is your goals and priorities

You have to think about yourself and your actions. What is the most important to you, what is your goal, is it long or short distance saving? This would be helpful in choosing your own budgeting method. Here are some questions, where you can start ;)

● Why do you want to save?

It’s worth writing it down and keeping it in mind especially while shopping. When you will see your aim, it should motivate you and any amount will bring you closer to accomplishing your goals.

● What is your financial goal?

Determine your savings objective, whether it’s building an emergency fund, saving for retirement, buying a home or funding a vacation. The specific goal will influence your saving method.

● What is your time horizon?

Consider how long you have to achieve your financial goal. Short-term and long-term goals may require different saving methods.

● What is your risk tolerance?

Assess your comfort level with risk. Investing in stocks has risk but greater potential returns, while savings accounts offer lower risk but lower returns.

● What is your current financial situation?

Evaluate your current income, expenses and debt. Understanding your financial situation will help you determine how much you can save and which saving method aligns with your budget.

● How much liquidity do you require for your savings to be?

Determine whether you need quick access to your savings or if you can lock them away for a specific period. For example, emergency funds should be highly liquid, while retirement savings may have a longer investment horizon

● Is your income predictable and constants or various and constantly changing?

Depending on whether the chosen method will be more or less challenging.

● Are you comfortable with the chosen method?

Consider your comfort level with the chosen saving method. If you don’t understand or trust the method, you may not stick with it in the long run.

● What is the tax implication?

Depending on your location and the saving method, there may be tax considerations to keep in mind.

What is the 50/30/20 rule about?

50/30/20 rule

This popular budgeting rule helps people distribute their income to achieve financial stability and manage money wisely.

It suggest breaking down your after-tax income into three main spending categories as follows:

1. Needs (50%): You can allocate 50% of income to cover essential, non-negotiable expenses such as housing, utilities, groceries, transportation, healthcare, insurance and minimum debt payments. These are the expenses required for your basic needs and reasonable standard of living.

2. Wants (30%): You can allocate 30% of your income for discretionary spending, which includes non-essential or discretionary expenses. This category covers things like dining out, entertainment, travel, hobbies and other lifestyle choices. It allows for some flexibility and enjoyment in your budget.

3. Savings and debt repayment (20%): Dedicate 20% of your income to savings and debt repayment. This category includes contributions to your emergency fund, retirement savings, investments, and paying down high-interest debs like credit card balances. It’s essential for building financial security and planning for the future.

The 50/30/20 rule offers a straightforward budgeting framework that emphasizes prioritizing essential needs, allocating a portion for discretionary spending and saving for both short-term and long-term financial goals.

Keep in mind that this is a general guideline and your specific financial situation and goals may require adjustments. It’s essential to adapt your budget to your unique circumstances and objectives. If you want to know how much money you can spend on each category, here is the calculator.

What does Zero waste budgeting mean?

Zero waste budgeting minimizes waste and promotes sustainable spending, emphasizing frugality, durable products, reduced packaging waste, DIY solutions, conscious consumerism and eco-friendly living, aligning your budget with sustainable principles.

There are many applications that will help you control your expenses and income on an ongoing basis. If you are interested in apps, this video may be helpful.

Financial life map method


Imagine your financial life as a journey with destinations, milestones and a path to follow. This method helps you plan your budget by visualizing your financial goals and aligning your spending with your objectives.


I. Identify your financial destinations

Define major financial goals, such as paying off debt, buying a home or saving for retirement.

II. Set milestones

Break down each destination into smaller, achievable checkpoints with specific financial targets.

III. Allocate resources

Distribute your income to different ‘routes’ that lead to your financial destinations, prioritizing high-priority goals.

IV. Track your journey

Regularly monitor your income, expenses, and savings against milestones, celebrating achievements along the way.

V. Adapt and adjust

Be flexible and make necessary changes as your financial situation evolves.

Advantages of this method include visualization, flexibility and motivation. You need to remember to set realistic goals and regularly review and adjust your budget to stay aligned with your financial priorities.

Ways to plan your personal budget

In conclusion, effective budgeting is a vital step towards achieving your financial aspirations. Knowing your priorities and budgeting methods empowers you to control your finances and make informed spending choices for a secure financial future. Happy budgeting!


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