June 17, 2020

Budgeting for Your Lifestyle

Don’t conform your life to a budget, find a budget that works and best fits your lifestyle.

Zero-Sum

This budget strategy is great for meticulous budgeting or people who want to take full control of every dollar that goes through their hands. The goal of this budget is to account for every dollar you earn and choose where it goes until you have no money left. The fun part is that you get to choose where every penny goes, any category you want is where that money will be spent. The hard part about this budget is keeping track of everything. Pairing this with the envelope method could make it simpler, otherwise you will need to track every expense to make sure you are only spending the amount you’ve allotted to each category. There are some digital apps that could help you track this more easily: YNAB, and EveryDollar, and Mvelopes are good places to start.

Envelope System

This method is a cash-based method to help you curb spending and give you a better feel for how much money you actually spend. Watching your money disappear from your wallet is much harder than swiping a card. The envelope system is similar to the zero-sum budgeting system with individual spending categories and associated budgets. You manage it by placing the budgeted amount of cash for each category in its envelope. You always pay with cash and can’t dip into another envelope when one goes empty. This ensures you don’t overspend in a single area. This one can effectively help curb spending because once the cash is gone it’s gone for the month (or every two weeks depending on when you allot the money). If you don’t like carrying physical cash around there is an app that functions in the same way called Mvelopes.

Pay Yourself First

This budget is simpler and requires less meticulous tracking. The trick is simply to choose a percentage amount of your paycheck to designate to savings and then you are free to spend the rest however you want. In essence, you are simply “paying yourself” and then using the rest for function and fun. You don’t have to track categories or spending habits. But if you notice that you can easily live off the remainder, you could increase the percentage that you save. You’ll keep building up funds in your savings and be able to live without tracking every cent.

50/30/20 Budget

This budget is similar to the pay yourself first system. You break down your income into three categories: needs, wants, and savings.

• 50% of your take home pay goes to your needs: utilities, rent, groceries, etc.
• 30%  goes to your wants: eating out, fun trips, the Oreos that looked good at the store, etc.
• 20% goes to your savings: paying off debt, saving for retirement, emergency funds, etc.

The trick here is making sure to accurately separate your needs and wants. Sometimes lumping groceries into one category will combine needs and wants. For example: the fruits and vegetables necessary for a healthy diet are needs, but that large pack of your favorite soda is a want. If you are having trouble living off of only 50% of your paycheck, consider changing the percentages to 60/20/20 so that some of your wants are shifting to needs. Maybe your rent is too high to leave you enough money for the rest of your needs; try finding a cheaper alternative when your lease is up.

Hopefully, you found a budget strategy that works for you in this list. It can take trial and error to find something that works for you, but budgeting isn’t impossible. Start by trying the one that makes the most sense to you and fits your lifestyle. You could also try combining elements of different strategies to build something new that works perfectly for your needs and lifestyle.