Basic Budgeting Rules for Starters

“The slightest adjustments to your daily routines can dramatically alter the outcomes in your life.”
– Darren Hardy

You have already learned why you should budget in the previous post, Budgeting: Why Should You Do It? and for sure, you are now asking either,

How do I start? What is the best way to allocate my money?
Why am I not seeing any improvement?


Budgeting is for everyone, but there is no one perfect budget for all. What seems impossible for one may be possible for some. You have to find a plan that perfectly fits your goals. Plus, you have to practice self-discipline.

Thus, in this post, you will be learning some basic budgeting rules and some tips for your budgeting journey. Let us answer the latter, first:

Why is there no improvement?

Quote by Alexa Von Tobel

You have been following a budget for some time now, congratulations, but you cannot seem to see or feel any improvement. One very common culprit is inconsistency. That is right! You have a budget planned out, but you are not fully following it every time.

It is OK if you are still starting because you are still finding the right jive, the right fit, or the right mix, but once you have settled into a proper plan, like any other plan, you have to stick to it so that you will see results. Sounds familiar? Yes, like your diet or workout or yoga plan, consistency is the key.

Pin for budgeting tips.

Planning Your Budget

After getting the push you need to start budgeting, you need to understand a few things first. Like any other number-related thing, budgeting also has a formula, and one that only a few ever knows or understands:

Basic Budgeting Formula: income — savings = expenses

Unlike your habit of spending first and then saving whatever is left from your paycheck later, the basic budgeting formula tells you to save or invest first and limit your spending to whatever remains. It is a more effective way of building up your savings, emergency funds, investments, and all other funds. Wise, right?

Moving on, you will now learn about the basic budgeting rules you can apply to start planning your budget; but you have to take note that every budget:

  • is as unique as the person preparing it;
  • has its own set of goals to achieve;
  • and is a manifestation of what an individual values.

With all these in mind, you should now understand that it is not required to take these rules as it is. If need be, you should adjust some items/ratios according to your circumstances. Also, these budget rules are from all the platforms/websites/books/proponents listed on the References section of this post.

Basic Budgeting Rules

Here is a pin of the basic budgeting rules I have gathered:

Pin for basic budgeting rules

It is ideal to set your after-tax (before contributions) income the basis for your allocations. The rationale behind this is that the taxes you pay are uncontrollable expenses, whereas the contributions are like assets that become receivable on certain conditions.

Moreover, you can edit some items on each budgeting rule based on the goals you are trying to achieve. Now, on to the rules:

  • The 80–20 rule is the most simple rule which encourages you to save or invest 20% of your income;
  • The 50–30–20 rule is a good rule for those who want to highlight leisurely activities as it gives you 30% for your ventures;
  • The 70–20–10 rule is a useful rule for those who are involved in credit transactions since it encourages to limit liabilities to only 10%. There is also a variation to this rule where 10% is set aside for tithes;
  • Lastly, the jar/envelope system is a budgeting system where you can be very specific with your intentions and separate the fund per purpose. It helps you track each goal and avoid using your funds for other purposes.

There are a gazillion budgeting rules you can come up with or modify depending on the goals you wish to satisfy; thus, there is no perfect budgeting rule. Yet, no matter how pretty or well-thought your budget plans are, it will all be a waste if you will not learn self-control, discipline, and proper financial management.

Indeed, you can always find ways to earn, but you do not have all your life to keep searching for money. Be a wiser you and do your older self-justice by following a proper budget.


  1. The 50/30/20 Rule of Thumb for Budgeting | The Balance,
  2. Don’t Like Tracking Expenses? Try the 80/20 Budget | The Balance,
  3. Kung Gusto Mong Yumaman, Wag Kang Mangutang… | Bo Sanchez & Arun Gogna (book)
  4. The Abundance Formula | Bo Sanchez (book)



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