Save Your MoneyJanuary 27, 2020February 24, 2020

10 Incredible Ways to Budget Effectively

The following is a guest post by broadbandsearch.net.

Budgeting comes easier for some than it does for others. When you’re good with money, there’s nothing to worry about, but when you’re not…you may benefit from some help. Here are 10 different ways to budget effectively, depending on your lifestyle, spending habits, and just how much you hate tracking your expenses and keeping spreadsheets.

1. Put Money Into Savings First

This is a loose definition of a “budget” because there’s no real tracking or much actual budgeting involved. However, it does prioritize savings (or other expense categories, like loans and other financial commitments).

The philosophy is simple: get paid, put your ideal amount into savings first, and then you are left to stretch the rest in whatever way you see fit. Can’t spend money on things you don’t need if you don’t have it.

Does this work for you? This is good for people who don’t like tracking and who are able to remain at least somewhat financially responsible.

2. Keep A Spreadsheet

Way too many of us love spreadsheets, so they will never die, especially when it comes to budgeting. It’s a good method if you don’t want to fiddle with paper budgets and like everything to be neat and tidy.

It’s super easy – just track your expenses for a few weeks or a month, and see how much is going in, how much is going out, and on what. From there, you can adjust accordingly.

Does this work for you? This method is great if you’re meticulous, keep receipts, and are super picky, in general. If you’re not interested in the details, you’ll hate it.

3. Good Old Traditional Budgeting

Do you have a pen and paper? Good. Start listing your income and all your expenses categories and what your ideal budget is for each of them.

Since you have no hard limits for this, it comes down to avoiding shopping triggers. Shopping when depressed or hungry, online shopping, and the impulse-purchase aisle at the till have all been shown to increase spending. Even social media has been reported to lead to overspending, so be careful.

Does this work for you? You can hack this budgeting method if you’re pretty good at staying within the limits or just generally cutting back on expenses. If you’re prone to impulse-purchases, you may need harder limits.

4. The Envelope Method

Popularized by Dave Ramsey, the envelope method only requires cash and envelopes. This one relies a little bit on the previous method, in that you need to figure out how much you want to spend for each of your expense categories.

Then, all you need to do is divide your cash up, and stuff it in the envelopes – one for groceries, one for gas, one for rent, one for leisure, etc. You’re only allowed to spend what you’ve got in the envelopes, so once it’s gone, it’s gone.

Does this work for you? If you don’t like to fiddle with cash, this may not be for you. But it can be an excellent method for those who have no self-control when it comes to cards.

5. 50/20/30

Need something simple and hassle-free? The 50/20/30 method is great because it’s very clear.

Your budget is divided into percentages according to expenses: 50% for necessities (groceries, transportation, mortgage, etc.), 20% is going to savings, and 30% is allocated to current expenses, like going out, clothes shopping, travel, or your astronomical phone bill.

Does this work for you? This is good for you if you like the flexibility of being able to choose if you want to cut back a little on some things to pad the others, while still staying on budget.

6. Tracking Apps

Is the sheer horror of how much you spend enough to keep you in check? Then maybe a tracking app is the right tool for you.

The advantage of this is that it tracks your expenses in real-time and shows you how much, where, and what for. That way, you can figure out exactly how much money you waste at Starbucks every week and be appropriately shocked and appalled.

Does this work for you? This can scare you straight to the point where you never spend money again, so it may just work for everybody. If it only stresses you out more, perhaps go for something else.

7. Priorities/Value-Based Budget

This is less about a super strict budget to save on grocery money, and more about what you spend your money on, in general. If you feel like you’re spending a lot but not getting a lot of what you want, this is excellent.

You see, this relies on a priority/value system. Let’s say you really love collecting vintage jewelry, but you don’t often have enough money to buy it. Start prioritizing your collection (or travel, or gifts for loved ones, or whatever else you value most) and take away from other areas that aren’t as important. No, not from your savings.

Does this work for you? If you’ve got significant amounts of disposable income, but feel like it’s not being used to make you happy, this can be a very positive shift for you.

8. Zero-Based Budget

If you enjoy spending, you’ll love this – this budgeting method relies on being left with zero in your bank account. You read that right – every single penny will be accounted for.

And no, we don’t mean going on spending sprees, but rather making sure all your money is working for you, whether that’s paying your rent, going into savings, or being invested.

Does this work for you? If you love knowing that you are maximizing the value and potential of your money, you’ll love this.

9. 60% Budgeting

This is sort of like the 50/20/30, in that you’re dividing your income into set percentages, according to where the money is going. The only difference is that 60% should cover everything in terms of expenses.

The other 40% gets divided equally (10% each) between 4 other categories, including retirement, long-term savings, short-term savings, and fun money.

Does this work for you? This is good for people who like things to be very well defined and divided.

10. No Budget

Exactly what it says on the tin – this isn’t as much a budgeting method as it is a flexible option for people who do a good job staying within their financial limits.

As long as you’re spending less than you’re making, you should be good to go. The only thing is that you need to be mindful of your bank balance and keep an eye on outgoings. You don’t want it getting away from you, because then you’re in trouble.

Does this work for you? If you’re good at holding back and managing your finances, this is perfect.

Conclusion

There’s more than one way to keep a budget, and hopefully, we’ve demonstrated that. There’s bound to be a budgeting method that works for you and your lifestyle, you just have to find the one that will fit with your financial habits. Find it, and you will once again be in control of your own finances.