10 Jul Styles of Budgeting
Money is a lot like children. If you don’t know what it’s doing, then it’s probably getting into a whole lot of trouble. For this reason, it’s important that every household has a manageable budget that they are able to stick to. Of course, budgeting isn’t the most exciting thing in the world, and, truth be told, there’s probably a lot of things you’d rather be doing than sitting down and looking at all of the money that you can’t spend the way you want to.
Nonetheless, it leaves everyone in a better financial situation to have a budget that is built around their needs. Here are some different styles of budgeting that you can use to create one that works for you…
Zero-based budgeting is that idea that everything in your paycheck as a preconceived purpose; every last cent! This means that you assign every dollar you make to go towards a custom-built priority list that pays itself off. Most of the time, the priority lists start with fixed costs, such as the expenses you need to keep your living space (mortgage or rent payments).
After that, you want to do other fixed costs, like your car payment, the gas bill, electricity, the internet, and the like. Beyond that, you’ve got variable living expenses, such as groceries. Beyond that, determine a realistic amount to put towards investing and saving, and then spend the rest on whatever the hell you damn please!
The 50-30-20 Method
The balanced money formula, which is also known as the 50-30-20 method, is a very easy to understand way to divvy up your budget. Essentially, this type of budget creates several hard restrictions about how much money goes towards specific areas of your life.
Under this rule, a maximum of 50% of the money you make should go to fixed expenses, which includes housing, food, heating, electricity, and insurance (among other things). Ideally, you use less than 50%, and instead use around 35%. After that, a maximum of 30% of your paycheck goes to desirable things, such as entertainment, extracurricular activities, and clothes. Lastly, at least 20% (and hopefully more) of your paycheck goes towards investing, retirement, and savings.