The Four Best Budgeting Methods to Save You Money
March 13, 2019
Budgeting is hard and many of us who attempt to budget look for some budgeting methods that will help us do it well. However, finding the right budgeting method is often much harder than you might think. What’s more, there are so many budgeting methods that it’s often hard to choose the right one.
You need to take a look at why you’re trying to save money, what you’re doing it for, and a lot more. The good news is that there are some great methods that we have found which almost anyone can use.
1. Money Balancing Method
One of the best methods in our opinion is the balancing method. It involves you calculating how much you spend but also making sure that you follow these guideline percentages for the total income you have:
- 50% should spend on immediate needs like rent, food, taxes, clothing, healthcare.
- 30% is for things you want but don’t need.
- 20% is for the savings account.
Simple and comfortable – the savings plan portion allows you to have funds if there are unexpected costs in a, particularly tough month.
2. The Zero Method
Many people live with fixed income amounts that always end up being exactly how much they need to live a normal life. If that’s the case with you, you should use the zero method.
It entails you writing down in advance how much you’ll earn and then planning your spending to reach that exact amount. That means that you’ll have to calculate the precise amount for each of your needs and wants. If you exceed some of these numbers, you’ll have to reduce the amount somewhere else.
3. Pay It First Method
This method is also relatively simple – it involves you paying all the utilities, debts, mortgage, rent, first. Anything that you have to pay for each month, you should settle it as soon as you get your paycheck.
This method works for people who are stressed out from worrying over money as everything is taken care of immediately and then all you have to worry about is spending money on food and the things you want.
4. The 60% Method
In many ways, this method is similar to our first one. It means that you’ll always commit 60% of your income to pay all the necessities, and all the bills you have. Including the ones that don’t count as necessities.
However, this method involves you making sure that the necessities and other bills don’t go over 60% of your income, and that means that you’ll have to cut down on something if you want to stick to this method. So no expensive phone plan and no Netflix, Hulu, and HBO all at the same time.
The remaining 40% should equally allocate to things like retirement plans, long and short-term savings, and fun money – the money you spend on dining out for example.
All in all, these four methods should be more than enough for you to choose the one that works best for you. Additionally, whenever you need some additional income to make sure you’re sticking to your budget plan, you can always apply for one of the small, low-interest loans we offer. Apply for one whenever you want through our website.