Struggling with budgeting? Don’t worry, there are various budgeting methods to choose from. This article presents five popular budgeting methods and their benefits. These include the zero-based budget, pay-yourself-first budget, envelope system budget, 50/30/20 budget, and the balanced money formula. The key is to find a budgeting method that aligns with your financial goals and stick to it.
5 Budgeting Methods to Consider
When it comes to managing your finances, budgeting is one of the most important things you can do. A budget helps you keep track of your income and expenses, prioritize your spending, and save money for the future. But with so many different budgeting methods out there, it can be hard to know where to start. In this article, we’ll take a look at five popular budgeting methods and what they’re good for.
1. Zero-Based Budget
If you’re looking for a budgeting method that tracks every dollar you earn and spend, the zero-based budget might be right for you. With this method, you start with a blank slate each month and assign every dollar to a specific category, such as rent, groceries, or entertainment. This helps you stay on top of your expenses and make sure you’re not overspending in any one area.
Good for: Tracking consistent income and expenses.
2. Pay-Yourself-First Budget
If you’re trying to prioritize saving and paying off debt, the pay-yourself-first budget might be a good fit. With this method, you set aside a certain percentage of your income for savings and debt repayment before you start paying for other expenses. This helps you make progress towards your financial goals without getting sidetracked by other expenses.
Good for: Prioritizing savings and debt repayment.
3. Envelope System Budget
If you’re looking for a budgeting method that helps you stay disciplined with your spending, the envelope system might be worth considering. With this method, you assign a certain amount of cash to each spending category and put it in a separate envelope. When the money in the envelope runs out, you can’t spend any more in that category until the next month.
Good for: Making your spending more disciplined.
4. 50/30/20 Budget
If you’re trying to balance your needs and wants, the 50/30/20 budget might be a good option. With this method, you allocate 50% of your income to needs (such as housing and groceries), 30% to wants (such as entertainment and travel), and 20% to savings and debt repayment. This helps you prioritize your spending while still saving for the future.
Good for: Categorizing “needs” over “wants.”
5. The Balanced Money Formula
If you’re looking for a budgeting method that’s simple and flexible, the balanced money formula might be a good fit. With this method, you allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment. However, unlike the 50/30/20 budget, you have more flexibility to adjust your spending categories based on your individual needs.
Good for: A simple and flexible budgeting method.
In conclusion, there’s no one-size-fits-all approach to budgeting. The best kind of budget is the one that works for you and your financial goals. Whether you choose the zero-based budget, pay-yourself-first budget, envelope system budget, 50/30/20 budget, or balanced money formula, the most important thing is to stick with it and make adjustments as needed. By taking control of your finances and creating a budget that works for you, you can achieve financial freedom and peace of mind.
References for « What is the best kind of budget? »
- The Balance: Zero-Based Budgeting
- Dave Ramsey: The Truth About Budgeting
- Money Under 30: The 50/30/20 Rule of Thumb for Budgeting
- Investopedia: Envelope Budgeting
- NerdWallet: How to Make a Budget
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