In one of my recent posts, we talked about budgeting methods in detail. There are several ways to establish a budget for your household, and we don’t want to find the “perfect” method to be another source of stress. The purpose of budgeting is to provide you with peace of mind, not anxiety. However, it does require work in the initial weeks.
While deciding between budgeting methods, the first question you need to ask yourself is; why do you need a budget, based on the answer, you can choose a suitable method.
Here are some simple ways to decide which budgeting method works for you:
Is saving money your main goal?
Is it for an emergency fund, for a vacation, or to pay debt? Are you saving up for your child’s education, to buy a house or a piece of furniture? All these goals can be achieved by choosing the 50/30/20 method or reverse budgeting method.
However, goals that need vigorous saving can be achieved by the reverse budgeting method. The reason is that you decide how much you need for savings and pay yourself first, and then adjust leftover money for other expenses accordingly. The 50/30/20 method is an apt approach for saving a fixed amount of money, e.g. for retirement savings.
Do you want to track every dollar earned?
The modern age of credit cards and digital payment methods makes it difficult to track expenses. I often catch myself wondering where my money went! and many others share the same feeling.
In such cases, use the Zero-sum budget method. It makes it easier to track every single incoming dollar and is an excellent method for large-family homes. People who like detailed map of their spending or pre-plan their expenditure during a month or a week also like to use this method.
Are you trying to control overspending?
You have to believe me when I say it, you feel like you’re walking on a tightrope when it comes to sticking to your budget, It’s just so tempting to stray from the path and indulge in some guilty pleasures. If you are tired of this slipping, How about you get just about enough cash and nothing more? The cash envelope method is appropriate to deal with overspending.
If going to the bank to get cash is a lot of work, there are various budgeting apps which track your money for you.
If you have more than 1 need
Also, you can use some of the budgeting methods together. If you want to set the amount of money you want to save but also deal in cash, you can use both cash envelope and reverse budgeting together. Or, you can use cash envelopes but opt to choose 50/30/20 as the budgeting method if your goal is to start saving money for retirement.
If you use any other method than these, I would love to know about other budgeting methods. Comment below!