How to Create a Frugal Budget

There are a few details you must include into a frugal budget. Your budget will never be exactly the same as the next person, but it is important that it contains all the proper information. Generally speaking, you can plan a budget around a few basic principles.


Your budget should have money built in to pay all your monthly expenses, no matter what they may be. Once you add these up, you will have a better idea of how much money you need in order to pay your bills each month. Regardless of how much you earn or what type of budget you are creating, this is the first thing you should consider. Your expenses must be taken care of above all else.

Debt Reduction

In addition to regular monthly bills, you want to leave enough money to pay down debt. While minimum payments are included in your monthly expenses, when you put additional funds towards your debt you will be able to pay it off sooner rather than later.

Savings and Investments

A savings plan is an important part of living well, however, this is often overlooked. Instead, any money that they have leftover goes towards entertainment expenses and miscellaneous purchases. Before you begin to spend your money with reckless abandon, you must allocate some of it to savings and investments. This can include anything from a savings account, to IRA, 401(k), to the purchase of stocks and bonds.

Entertainment Money

Just because you are on a frugal budget does not mean that you have to cut all of the fun out of your life. Money for entertainment should be last part of your budget. Be sure to focus on expenses, debt reduction and savings before you put money aside for fun. The basic difference between the two is that you need to pay your bills and save money, and you want to spend money on entertainment.

Are you being Honest with yourself?

As you begin to create your budget you will need to be honest about your past spending habits. Think about your future goals. Be careful to recognize your past mistakes and behavior that led to money problems, and learn from the bad behavior so that you do not repeat it again.

To ensure that you are being honest, base your budget on exact facts and figures from the past. For example, you can take your average expenses over the past six months and then use this number when creating your budget. This will help to keep it as accurate as possible.

Add all of the ingredients of your personal financial situation to come up with the perfect plan for you and in the end, you will have a plan that you can follow. Budgets are very personal because priority lists tend to vary slightly. Just remember to pay your needs before your wants and you will be successful.

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