Budgets are like diets. There are more than one kind, one may work better for you than others, and you can still splurge a bit while also being disciplined.
Here are 5 types of Budgeting Strategies. Choose the best one for you and go for it!
Proportional Budgeting– This strategy is pretty simple and straight forward. It’s easier to keep track and requires less math overall. Proportion your income into three categories:
- 50% spent on necessities, like housing, food, healthcare, utilities, and transportation.
- 20% spent on savings. This includes any retirement contributions as well.
- 30% spent on needs and wants, like entertainment, clothes, gifts, and streaming services.
As you can see, you can make cuts from any category to stay within your budget.
Pay Yourself First- This budgeting strategy focuses on paying yourself first. Before you pay any bills or anything else, your first priority is to put money into savings, emergency accounts, retirement accounts, or investments. This strategy is for your financial independence and long-term financial freedom. Put yourself first. Your kids do not need another toy. You can put that $20 into an account for yourself.
Zero- based Budgeting– This budgeting strategy is for the penny pincher and die hard money counter. This strategy says that for all money coming in must be assigned to a category before spending and going out. You must keep track of all your expenses. You can do this to the very penny or within a few dollars. Basically, you will write down all your spending for the month.
Envelope Method- This budgeting strategy is easy as well. Basically, you put your allotted spending money into different envelopes. Once you spend all of that money, then you are finished until the next paycheck. This is a good strategy for those who may spend more on shopping, entertainment, and eating out than they would like. You use an envelope system, whether paper envelopes or a plastic divider. If you put $80 in the entertainment envelope and spend it, then you do not spend any more money on entertainment until the next paycheck. You have to make trade-offs on your spending.
Reverse Budgeting– This budgeting strategy basically wants you to choose one money goal for the month and focus on it first. Money goals can include increasing an emergency savings account, paying off debt, increasing retirement contributions, or saving for a house down payment.
Choose the budget that you are more likely to stick to for at least 3 to 6 months. After you clearly identify your spending habits, you can then decide what to cut and what to keep.
If you would like a free 12 Month Budget Planner, go to https://mailchi.mp/ea2884cbd29a/free-budget-templates
You will receive a 12 Month Budget sheet for each month. In addition, you will also receive a notes page to make notes of unexpected expenses that came up so that you can budget better next month and also next year. The Budget Planner is not dated with a year and can be used over and over again.
Simply enter your email address and the pdf documents will be emailed to you.
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