Couple with laptop budgeting in living room

Swapping lattes for home-brewed coffee? Smart move. These budgeting tips will get you even closer to your financial goals.

If you've got big financial goals, you'll need a plan to get there—and that plan is called budgeting.

Whether you’re happy to stay a renter or you’re saving up to be a homeowner someday, budgeting is a crucial step toward reaching your financial goals. If you want to get serious about budgeting, making your own coffee versus buying it at a coffee shop is a start, but it’s better to focus on housing, where most of your dollars go. Here are a few ways to do it.

Top Budgeting Tips for Renters

  • Create a monthly budget.

    Not making that impulse buy puts you on the right financial track, but if you don’t have a formal budget, every buy is an impulse buy. Tracking where your money goes is key to budgeting. When you watch your expenses carefully, it’s easier to see where you could make some changes.

    One type of budget is the 50/20/30 rule. With that, 50 percent of your income goes to living essentials, 20 percent goes to savings (and debt repayment), and 30 percent is to spend on anything you like.

    While it sounds great to have 30 percent of your income for personal use, there’s a catch: It’s difficult to get your living essentials—rent, utilities, groceries, and transportation—down to 50 percent. Keep trying, though. It’s a goal worth shooting for. Plus, next time you’re apartment hunting, you can look for a rental rate that better fits the 50/20/30 equation.

  • Be realistic about housing.

    The biggest part of most people’s budgets is housing. With rents getting expensive in much of the country, cost of living can be a budgeting challenge. The general rule of thumb is to spend no more than about 30 percent of your gross income on rent. That way, you can afford other necessities, such as utilities, groceries, car payments, and—don’t forget—renters insurance.

    But many people, particularly if they live in big cities, spend 50 percent—or more—of their income on rent. If that’s the case, you’ll need to make budget cuts somewhere else, such as not owning a car and using public transportation instead.

  • Add a roommate.

    Getting a roommate can be one of the most dramatic ways to cut down on your living expenses. But be sure to get permission from your landlord to add someone to the lease—bringing someone in on the sly could get you evicted. Landlords typically like to screen tenants, and they often charge more rent for each additional roommate. Even so, that extra person could save you a lot of money.

    If you get approval, make sure you set up some house rules that you and your roommates can uphold to help ensure a successful living situation.

  • Start saving.

    It might seem impossible to save money when funds are already tight, but there’s a reason people always say to pay yourself first. Set up a savings and a checking account at the same financial institution. When you are paid, put some of that money into your savings account first thing.

    Can’t swing 20 percent? “Start with a modest amount, such as 5 percent of your net income,” says Milena Thomas, a financial consultant with a background at Merrill Lynch. “Try to increase that savings amount by 1 percent each month.”

    If you get a tax refund, save it. The same goes for a raise. If you get one, pretend that you didn’t, and put the extra money into savings.

  • Make small changes in your spending.

    This step might not be fun, but it’s probably not as bad as you think. “By balancing your needs and wants and prioritizing when you can, you’ll soon find a list of things you can actually live without,” says Jamie Wharton, marketing coordinator at, a low-cost lender.

    Some tried and true ways to cut spending: cancel your gym membership and run outside, ditch the cable TV for online streaming, limit shopping trips, buy generic brands, and ask for discounts from your service providers (or switch to cheaper ones if possible).

    “You should also cut back on entertainment spending, at least in the short-term,” says David Bakke, a finance expert at Money Crashers. “There are probably plenty of ways you can have fun for free or at a low cost locally in your city, and you can uncover these ideas through online research.”

  • Learn to cook.

    It’s tempting to eat out all the time, especially if your rental is close to restaurants. And some dining establishments aren’t too expensive. But on the whole, having someone prepare your meals for you will be more costly than going grocery shopping and cooking meals for yourself at home.

    Hint: Embrace sheet-pan dining. Put your protein and some chopped veggies on a sheet pan, toss with olive oil and seasonings, and roast. Easy and affordable.

  • Focus on your goals.

    It’s one thing to make a budget and another to follow it. If you have a clear financial goal in mind—such as saving for a down payment on a house—you’ll have something to work toward.

    Having a goal makes it easier to follow a budget. Whenever you get the urge to spend money on something, picture yourself in your dream house (or whatever your goal may be). That extra latte might not look so tempting after all.

Want more budgeting tips? Find out exactly how much rent you can afford right here on Trulia.