Its an awful feeling to wonder where all your money went at the end of the month.
Even worse is wondering how all your money is gone when you still have a week left until payday.
But there isnt just one way to budget money.
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Budgeting styles vary considerably.
(These days, there are even apps!
We likeQuicken Simplifi.)
What works for you will depend on your goals and how you prefer to track your finances.
Well explain how 10 popular budgeting methods work.
Can You Survive 10 Days of Budgeting?
If it’s crucial that you wrangle your budget, it may be time to consider a savings challenge.
Why Is Budgeting Important?
Budgets are much more than income minus expenses.
Which Budgeting Method Is Right for You?
Not all budgeting methods are created equal and every financial planning process is different.
This decision is partly your preference but also what your current finances dictate.
Have you wondered what portion of your paycheck should be going to better your financial future?
The50/30/20 budgetmight be right for you.
Lets say your take-home pay is $3,000 per month.
This method is a great fit for people who need guidance on balancing saving, investing and repaying debt.
After all, 30% is a pretty generous allotment forfun money.
The Zero-Based Budget
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Next, assign a spending limit to each of those budget categories.
Heres an example of what your budget might look like on a $3,000 monthly income.
Itll help you become hyper aware of your finances.
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This budgeting method is pretty self-explanatory.
With a bare-bones budget, you cover only the expenses that are absolutely necessary.
Whatever is left over, you save.
The bare-bones method can help anyone needing a spending reset.
60% Solution
Sure, its smart to prioritize the essentials.
But what about those expenses that arent vital but that we consider very important to our lives?
The 60% solution gives value to that bang out of spending.
This budgeting method is similar to the 50/30/20 method, but the rules are a bit different.
With the 60% solution, youre budgeting 60% of your income on expenses youre committed to.
As for the other 40% of your income?
it’s possible for you to put that toward savings or use some of the money for discretionary spending.
Paycheck Budgeting
Most budgets are set up to cover a whole months worth of spending.
This budgeting method gives you a better picture of how much discretionary money you have available between paychecks.
1 ($1,500 income)
$150 Utilities
$150 Groceries
$50 Entertainment
Budget No.
The Calendar Budget
You probably already use a calendar to keep track of upcoming events and appointments.
Why not use it to keep tabs on your financial life as well?
With a calendar budget, youll stay on top of all your bills and other anticipated spending.
A calendar budget is pretty simple.
you might take note of those expenses on the calendar as they occur.
Keep a running daily balance so youll always know where your finances stand on any given day.
Chances are, you already use a calendar in some capacity.
Thehalf payment methodhelps spread those expenses evenly.
If not, you might transition into the half payment method slowly, one bill at a time.
Heres an example of what the half payment method looks like:
Paycheck No.
2:$1,500
This method is fitting for people who get paid biweekly or semimonthly.
Kakeibo
Kakeibois a century-old money management style from Japan one thats still very relevant and useful today.
Kakeibo incorporates mindfulness, journaling and minimalism into budgeting.
After putting aside savings, youll use a journal to track your expenses as they occur.
The idea behind a pay yourself first budget is pretty simple.
The 50/30/20 budgeting method is a more specific version of this approach.
Values-Based Budgeting
This budgeting method is pretty simple.
You let your lifes priorities dictate how you spend your money.
For example, perhaps taking more vacations and seeing the world is one of your top priorities.
This way, youll free up extra discretionary income to spend on something you love.
Its easy from there: take a look at your budget and track your spending.
See if this new system is working for you and your expenses.
People who are a little too tight with their money benefit from this method.
That being said, its likely not for the person drowning in debt or on a fixed income.
Values-based budgeting is based on a big-picture perspective.
A more solidified, numbers-based budgeting method might be better for some.
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You commit to paying for variable expenses such as groceries, clothing, entertainment and dining out with cash.
Step 1:Youll need to determine how much you’re free to spend in each category.
One envelope might contain $300 for groceries and another might have $100 for entertainment.
When youre out food shopping, youd spend money from your grocery envelope.
If you go to the movies later, youd pay for the tickets using cash from the entertainment envelope.
Its important to note that you wont use cash envelopes when it comes to fixed expenses.
Even bills that tend to vary like your utility bills should be exempt.
In addition, your savings allocations should go into the appropriate accounts not cash envelopes.
This system is for those who find themselves swiping their debit or credit cards past their budgeted spending limits.
By limiting yourself to a finite amount of cash, its (almost) impossible to overspend.
When choosing a budgeting method, consider how strict you want to be with your spending.
Do you want to track every dollar or take a broad approach to monitoring where your money is going?
Think about your financial priorities.
After you choose a budgeting method, think about how youll carry out that budget.
Will you go old school and break out a pen and paper to write everything down?
Abudget binderis a great way to keep all your financial info in one place.
A bullet journal allows you to add some creativity to the budget process.
You may find that it takes some trial and error to get yourself accustomed to budgeting.
You might try out a budgeting method only to decide its not for you.
And thats OK. You might prefer another.
Dont let the budgeting blunders get to you.
Keep at it, and eventually, youll master this whole money management thing.
Nicole Dow is a former senior writer at The Penny Hoarder.
Senior writer Kaz Weida contributed.
