9 SUCCESSFUL Ways To Be Fiscally Responsible

I always get surprised when I hear about the amount of consumer and student loan debt a person has. This financial situation is a future I don’t want for my kids. So, I asked myself, “How do I prepare my children for the future and be fiscally responsible?” 

This simple question of “How?” unlocked my mind on the way I thought about money. I discovered that it wasn’t enough to graduate college and work a stable career. Instead, I did nine things to become a fiscally responsible person!

What Does It Mean To Be Fiscally Responsible?

Fiscal responsibility describes a person who has self-control and accountability for their spending. 

Government institutions’ fiscal responsibility is about how wisely those who hold an office spend tax-payer dollars and manage money in the federal reserve bank. Defining fiscally responsible for personal finances is about how wisely an individual spends their earned income.

Why Is It Important To be Fiscally Responsible?

I have a decent-paying job, and I used to spend money unconsciously. I would always have to wait for my next paycheck to cover my unplanned expenses. I wasn’t responsible when it came to spending money. I was potentially putting at risk my family’s finances.

For ten years, I had over $250,000 in consumer and student loan debt! If I didn’t make a change, then I may have never got out of debt. I’m happy to say my consumer and student loan debt is now less than $6,000 with the ability to pay it all off!

That is why it’s so essential to becoming fiscally responsible. You need to control your money and not let your money be in control of you.

Fiscally Responsible Infographic

How Do You Become Fiscally Responsible?

There isn’t a magic number that indicates that you are fiscally responsible. Instead, the kind of behavior you have when it comes to spending is the deciding factor.

Below are nine easy ways to become fiscally responsible. You can perform each method in any order. Most of them you can do simultaneously.

Know Your Net Worth

Net worth is an indication of someone’s financial situation. It is not how much a person makes in a year. Instead, net worth is the dollar amount of one’s assets minus their liabilities or debt. 

Net worth Formula = Assets – Liabilities

For example, a person has $50,000 in stocks and $10,000 in consumer debt. Therefore, this person’s net worth is $40,000 ($50,000 – $10,000 = $40,000). 

On the other hand, a different person has $20,000 in a retirement account and $40,000 in student loan debt. This person’s net worth is negative $20,000 ($20,000 – $40,000 = -$20,000).

Having a negative net worth is a reality check that tells a person they need to start making changes to their financial habits. There isn’t an exact dollar amount that considers someone financially stable.

Instead, the key is which direction is one’s net worth trending: Up or down?

Create a Budget

A proper budget can help prevent anyone from overspending. People may not like budgets because it makes them feel restricted. When in reality, a successful budget can give people freedom with a planned amount!

There are different budgeting strategies, such as a Proportion Budget. A proportion budget assigns a proportion of your paycheck to a category like the following:

  • Essential expenses: 30%
  • Wants: 30%
  • Savings: 40%

Other examples of budgets is a “Pay Yourself First” Budget and an Envelope Budget. Others use a cash diet to control their spending.

The method I recommend and personally use is the zero-based budget

This budgeting strategy gives every dollar from your paycheck a purpose! Whether a portion of your income goes towards bills or a college fund, every dollar gets an assignment.

For more details on how to do a zero-based budget, check out my article “What is a Zero-Based Budget + How I Found $10k“.

A budget isn’t a plan that you set once. Instead, it is a plan that you need to review periodically (i.e., every month). A periodic review can optimize your budget by reducing limits in some categories and reallocating them to others.

For example, you budget $150 for gas for January. At the end of the month, the actual amount spent on gas was $50. Realizing the difference between the money spent and the budgeted amount offers an opportunity to reduce a category’s budget.

For February, you can reduce the budget to $75 and allocate the extra $75 ($150 – $75) to a category that may need help or go towards savings. 

Track Your Spending

Once you create a budget, the next step is to track your spending and follow it. Tracking can be done easily using Google Sheets.

If you’re serious about building your wealth Personal Capital has a great tool to manage your wealth. They also have dedicated advisors to help you along your journey.

Make sure you strive to spend money within the budgeted amounts. This way, you can avoid overspending!

Fiscal responsibility comes into play primarily here. If you’ve already spent the amount budgeted for a particular category, then you will need to hold off until the next month!

I understand there might be instances where you might go over a budgeted amount. Reviewing your budget and comparing it to your actual spending is vital. Tracking your spending will help determine more accurate budget amounts.

Pay Off Consumer Debt and Student Loan Debt

Reducing your debt is one of the ways to increase your net worth. Unfortunately, it’s becoming common among generations to have credit card debt and student loan debt.

However, just because something is expected or acceptable does not make it responsible!

Debt can consume most of your paycheck and prevent you from doing more productive things with your money, such as growing it or building up a savings fund.

A strategy I recommend to pay off several debts is the debt snowball method. This method doesn’t focus on paying the bad highest interest debt first. Instead, it focuses on paying down the lowest debt balance first.

Below are the simple steps for this strategy:

  1. Identify all your debt (excluding your mortgage)
  2. Order your debt from lowest balance to highest balance
  3. Pay the minimum monthly payment on all debt
  4. Budget extra money towards the lowest balance
  5. Repeat Steps 3 and 4 until you pay off the lowest balance
  6. Reallocate the money from paid off debt to the next lowest balance
  7. Go back to Step 3

As you pay off the lowest debt, you can use more money to attack the next lowest debt. After each debt payoff, the payment gets more prominent, increasing like a rolling snowball.

Furthermore, this will not impact your lifestyle because you’re just shifting the money you’re used to not spending. However, what you need to avoid is lifestyle creep. 

If you have to use credit cards, don’t revert to paying only the minimum payment and add more to your overall balance. Instead, take advantage of the rewards that credit cards offer and pay back the full balance!

Build an Emergency Fund

It’s essential to build up an emergency fund to handle these unplanned situations! There might come a time when a person is negatively impacted financially due to an unforeseen event, such as a car accident or a job loss.

A fair dollar amount to have for an emergency fund is three to six months of monthly expenses. For example, if a person’s monthly expenses total $3,000, then an emergency fund for six months would be $18,000 ($3,000 x 6). 

An emergency fund relieves your normal budget pressure and avoids the need to acquire unnecessary new debt.

Develop Savings Goals

Make a plan for your money by creating different savings goals. These goals can be saving for a house down payment, a wedding, or paying for college tuition.

Estimate how much is needed to fulfill each goal. With a budget, you can see what rate you’re saving and have an idea when you’ll reach your goal.

For example, a saving goal for a house down payment is $10,000. A person can budget $200 a month towards this goal. Therefore, it would take this person four years to reach their targeted down payment.

Once you reach your goal, then you can confidently make significant payments. The irresponsible action would be to make a big purchase and wonder how you’re to make up that money.

Invest Your Money

Due to inflation, the dollar value is not the same as it was five or ten years ago. And, if you think you’re getting a pay raise, that’s just your income trying to keep up with inflation. 

Hence, investing your money is the way for you to increase and grow your money. According to Investopedia:

“Investing is the act of allocating resources, usually money, with the expectation of generating an income or profit.”

Below is a list of ways you can invest your money. Also, check out the 2021 State of Retirement Finances here.

Diversify Your Investments

There is a saying, “Don’t put all your eggs in ONE basket.” This statement is also true for your investment strategy.

If you have started investing your money for retirement, pat yourself on the back! Keep in mind, putting all your money in one kind of investment vehicle can put you at risk. 

Therefore, you should diversify your investments and create multiple streams of income to protect your wealth!

Mutual funds and stock trading provide the opportunity to allocate your money into different product classes, such as stocks and bonds. Mutual funds are a form of diversification that can counter an economic downturn.

We invest in mutual funds and take it one step further by investing outside of the stock market. We accomplish this by also investing in real estate!

This kind of diversification protects us in the case that the stock market OR the housing market is suffering. My husband refers to the time when both markets crash as the Zombie Apocalypse!

Get Proper Life Insurance

Part of fiscal responsibility is also preparing for your untimely death with life insurance assistance, specifically, term life insurance.

Term life insurance provides life insurance coverage for a set period, such as five or ten years. The term can vary depending on the insurance provider.

For a relatively small premium, the beneficiaries of the policy will receive an amount in the event of your death.

The payout from a life insurance policy isn’t a reason for your spouse to stop working. Instead, this insurance temporarily replaces your income, mostly if you are working on paying down debt!

There also exists whole life insurance, which does not expire after a set term. Instead, it lasts for your entire life. For that reason, this kind of insurance has a higher premium

However, having whole life insurance isn’t entirely necessary. As long as you have a sufficient emergency fund, no debt, and can start withdrawing from your investments, you no longer need to be insured!


Fiscally responsible people have a plan when it comes to spending their money and execute. No one wants to live in debt forever, but rather be debt-free.

Ever since I became intentional with my money, achieving these fiscally responsible goals became natural. I’m confident if I continue to stay on this path, then within the next couple of years, I will become a millionaire!

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Jacqueline is a wife and a loving mother to two lively kids. Alongside taking care of her family and working full-time in healthcare, she is a real estate investor and a personal finance blogger. She manages the finances for her household and her small real estate business. Also, she has been featured in Grow from Acorns + CNBC, CNET, Business Insider, USA Today, and Ladders.