Budgeting: 3 Types to Try!
Hello Money Masters!
You know, I have been traveling a lot recently and when you’re on an airplane you have plenty of time to think, and what do you suppose I think about? You guessed it! Ways to help my money masters, well, master their money! It dawned on me that not everyone budgets the same way. Some of you might be in the market for a new budgeting system because you’re not satisfied with your current ways or maybe you just like to try new things. Whichever the case may be, read on for 3 types of budgets and test them out for yourself…
3 TYPES OF BUDGETS:
Budgeting systems are designed to help you manage your money and what you do with it. Before choosing a system, evaluate your financial goals in order to select one that best matches your financial future. For example, is your goal to save for a house or annihilate your credit card debt?
Budget #1: 50/20/30
This system spreads your income into 3 categories:
Necessities (50%): housing, groceries, utility bills, car payment or commute costs
Savings (20%): savings accounts/plans, debt payments, emergency funds
Wants (30%): cable subscription, cell phone plans, gym membership, dining out, entertainment (note: 30% is the maximum for this category)
Budget #2: Envelope System
This budgeting system is best for those who need to get a handle on extra (unnecessary) spending. The trick here is to use cash instead of mobile payment apps or debit cards. Having cash in your hand and in your sight does help you control spending. Here’s what you do:
Break your expenses down into areas and write the name of each area on an envelope. Set a specific amount to spend per category per month and fill the envelope with that amount in cash. Once the envelope is empty, there is no more spending in that area that month.
The visual of the money actually leaving the envelope is the trigger. Try it!
Budget #3: Zero-Based Budget
This system is a no-nonsense, clear method of budgeting your money. What you want to do is take your income amount and allocate EVERY dollar to something until you have $0 each month. You can allocate to a vacation fund, savings, groceries, bills, etc. Just make sure to track all your expenses to stay on course.
Say your monthly amount is $1000. After you allocate for rent, groceries and bills you have $200 left over. Are you done? NOPE! You need to find a place for that $200 and stick to it. Make sense?