This may surprise some of you but, I have a love/hate relationship when it comes to budgeting. I mean, I know that it is necessary but, sometimes it can be a hassle. Some expenses, require a more strict approach and I like to switch up my budgeting method depending on what I have going on. Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget and this budget will help you determine in advance if you have enough money to cover your monthly expenses, even the unexpected ones.
Here are six different budget methods that can be used to create a spending plan tailored to your income and expenses.
What you will need:
Different Budget Methods
- 50/20/30 budget – allocate income according to these percentages: 50% to needs, 20% to savings & debts, 30% to wants
- Cash envelope system– use only cash placed in envelopes for expenses, once the envelope is empty that’s it!
- Zero-sum budget – each dollar is assigned to a specific expense, savings, or debt payoff – the goal is to get your balance to $0 at the end of the month
- Traditional – budget the way you would with the zero-sum but there is no goal to reach $0
- Debt payoff – your priority is to pay off debt
- Savings budget – your priority is to build your savings
If this is your first budget, start slow. Use the next few days to gather your monthly income and expenses to start working on your new budget.