When it comes to managing your finances, budgeting is one of the best ways to break down how much money you have coming in and how much money you have going out. There are numerous different budgeting methods out there, and it can become overwhelming to try to decide which one works best for you. Budgeting is not a one-size-fits-all approach, as each person’s financial goals and dreams are unique.
If you’re wanting to try to find a budget that is going to work best for you and your financial needs, we’ve taken the time to highlight a few different budgeting methods that can help you get started.
The Envelope Method
Over-spending is a common concern when it comes to many people’s finances, and if you find yourself wanting to improve your over-spending habits, then the envelope method might be worth considering. The envelope method is exactly what it sounds like – you withdraw money each month and keep it in envelopes designated for certain expenses, such as groceries, gas, or clothing. If you have any money left in your envelopes at the end of the month, you can either roll that money forward to the next month or put it towards another goal, such as paying off a credit card or building savings.
While it may not be ideal to have to carry cash around with you, the envelope method can be a great way to help you overcome overspending habits and maintain better control over how much money is going out each month.
The 80/20 Budget
One of the biggest reasons that people want to budget is to ensure that they not only have enough money to cover their usual monthly expenses but also want to ensure that they have some money left over to put into savings. This is a great opportunity to try the 80/20 budgeting method. With this method, you take your savings out first, then use whatever money that is left over to pay for your usual expenses and any other purchase you plan to make throughout the month. It is typically recommended that you take approximately 20% off as savings, putting a large portion of that towards retirement and the rest towards smaller savings goals.
What makes this method ideal is that, once you’ve skimmed off your savings, you don’t have to worry about where the rest of your money is going. This method is also often referred to as the ‘Pay Yourself First’ method.
Budgeting Tools & Apps
Another great way to tackle budgeting and be able to keep track of your finances easily is to utilize a budgeting tool or app. Apps have become increasingly popular because you can easily access them on your phone at any time. Some online banking apps even offer budgeting tools built right into the app itself, which makes it convenient to track your expenses. Many apps provide you with handy visuals such as graphs and charts so you can easily see where your money is going and be able to track the growth of your savings and work towards a specific goal.
No matter what your financial goals may be, finding the right budgeting method can be a great way to get your finances in order. Whether you’re looking to build your savings, pay off debt, or just have a better understanding of where your money is going, budgeting is a great way to set yourself up for financial success!