It can be difficult to figure out how to budget if you don’t love numbers. But what if I told you that this is no longer the case, and with the help of modern budgeting tools that can make life with your finances simple and stress-free? These tactics could work for your money goals, whether you are saving for a dream vacation or trying to break the cycle of living paycheck to paycheck.
Even if you hate maths, these five budgeting tips will help you to seize control of your cash.
The 50/30/20 Rule
With the 50/30/20 plan, it’s simple to divide your money into three categories: needs, wants and savings.
How it works:
- Needs at 50%: Reserve 50% of your paycheck for what you need, such as rent, groceries, utilities, and health care.
- 30% for Wants: Spend this portion of your paycheck on things that you want, such as restaurant meals, entertainment, and hobbies.
- 20% for Savings: Relegate this slice to establishing savings accounts, contributing to retirement accounts, or paying off debt.
Why it works:
This approach is great for people who like things to be simple but still want to be able to switch up their look. It will allow you to be sure that you are using your money and credit to pay for the things which are the most important to you and it will also help you have some fun and save money.
Tips for success:
Put extra attention in each of those areas and keep them updated as your income or priorities shift. The point is to manage your money smartly without doing hard math.
Building Your Budget from the Ground Up (Zero-Based Budgeting)
In ZBB, every dollar has a job. At the month's end, your total income should match your costs.
How it works:
- Include everything that earns you money.
- Allocate everything to one of three categories: spending, saving, or paying off debt.
This ensures that you have full control of your money and allows you to know with absolute certainty the location of each dollar – ensuring that no dollar is wasted or not reconciled.
How to be successful:
Be careful about how much you’re spending so you don’t overdo it. You can make doing this easier and a whole lot less stressful if you use budgeting applications.
The System of Envelopes
An old-school budgeting method, the envelope system uses actual envelopes to divvy up spending.
How it works:
- Withdraw money for each item in your budget – grocery, entertainment, etc.
- Label it on envelopes with money inside.
- Only use the money in each envelope in that category each month.
It tells you how much money you have left to spend and prevents you from buying impulsively.
Good luck, and here are some tips for success:
If you prefer to shop on the internet, a digital version will enable you to create “envelopes” or subaccounts within your bank account.
Pay Yourself First
This approach flips traditional budgeting on its head, with savings taking priority over paying bills or whatever you need to do.
How it works:
- Decide how much you want to save each month.
- This cash will be automatically swept into a savings account before you pay any bills.
- Use the remaining money to cover things you need to survive.
It encourages you to save money consistently and learn good money habits.
How to succeed:
If you need to, start small. Automate transfers to make saving painless. Also, remember that modest sums can grow significantly over the decades thanks to compounding.
What to Do With the Extra Money: A Simple Plan for How to Spend
This is a fantastic budgeting method for those who hate strict budgetary limitations, as it allows you to establish loose boundaries on what you can spend in each category.
How it works:
- Establish overall spending limits based on how much you make and what you’d like to do with the money.
- Think of these as tips, not laws.
It lends a helping hand so you can be independent financially and rewards you for spending money smart and keeps you on track.
How to be successful:
Review your money regularly so that you know everything’s on track for your big goals and you’re not worried about the math. Adapt your plan as necessary to ensure you continue to feel good about your financial future.
To Sum Up
These five budgeting rules demonstrate that managing your money doesn’t have to be difficult or jarring. You may feel a new sense of control over your money if you select a strategy that’s right for you and your lifestyle. When it comes to managing your money, the secret is to find what works for you. And don’t let some math scare you away. Put one of these tactics into action and watch how it changes the way you think about money.
