What type of budget should I try?
There many times of budgets some people like to choose based on their income. I would like to go over some of the types of budgets that are out there. After that, I would like to go over my own budgeting strategy. So what type of budget are out there? Let’s go over some.
The Envelope Method
This method is good for the people that need help curbing their spending habits. When you first receive your paycheck you are to divide every dollar you make for a purpose. Start by dedicating a specific amount to assigned categories in your budget. You then use envelopes for each category and fill them with the amounts you budgeted for. The envelope budgeting method is best done with cash but there is budgeting software out there that mimics this method. A good app to try is “The Goodbudget”, it’s a digital choice without the paper envelopes. You would just have to track your spending more frequently to stay consistent. After you fill the envelopes you are free to spend what is allotted in them. Once the envelope is empty, you are done spending in that category. This method enforces discipline and control spending habits.
The 50/30/20 Budget
This budget is great for people that need gages on their expense categories. The method is great for variable income and constructs a limit for each expense. Savings are important to some, and this allows you to do that. The three major categories are broken up by these percentages: 50% to Necessities, 30% for wants and 20% for savings plus debt repayment. Divide your income by those guidelines and spend with the amount allotted.
Creating a purpose for every dollar to eliminate the problem for overspending and late bill payments. If you’re just starting out, this was the best method to try. Perfect for people that overspend, this allows you to make the most of every dollar. After you receive your income you dedicate every dollar on purpose for an expense or purchase until there is zero left. Even if you planning on shopping at Macy’s on a spree, you assign an amount in your budget and only spend that. A good way to get an idea of how much to assign for everything is to review last month’s spending and make your numbers to your benefit. Keep track of every expense so you don’t overspend your assigned amounts.
Lastly, my method The 30/30/25/15
My method has many initial steps driven by my experience of bad money choices. To touch base on this 30% is for Fixed Expenses, 30% for Variable expenses, 25% for Housing and 15% for savings and sinking funds. I have more percentages because these are the main categories that need control. Saving and sinking funds should be included in every budget, give you a feeling of growth. Not very paycheck should be put away for everything and everyone but yourself.
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