(NewsSpace.com) – Budgeting is an incredible tool for creating financial stability. While the concept may seem daunting at first, it’s important to understand that there are quite a few budgeting styles to choose from. The trick is to find the one that really fits your lifestyle and works well with your goals.
1. The 50/30/20 Method
For newcomers to budgeting, the “50/30/20” method may be the easiest to navigate. The plan allows 50% of available funds for necessary expenses, such as rent, food, and utilities. The 30% goes to discretionary spending, which could include entertainment, gifts, clothing, and other irregular or unnecessary expenses. Finally, 20% goes to paying down debt and savings.
2. The Pay Yourself First Method
The “pay yourself first” budget prioritizes absolute essentials, debt reduction, and savings. Once those essentials are dealt with, what’s left over is discretionary spending money. That doesn’t mean it has to be play cash. A responsible budgeter might take some of that leftover and put it towards a high-interest credit card or loan payment.
3. The Envelope Method
For a simple fix for those having issues controlling spending, the “envelope” method of budgeting might be a win. This one is a simple enough program: put the money needed for each item in an envelope, and when it’s gone, it’s gone. For some things, like rent, utilities, and debt payments, the envelopes will be fairly easy to maintain. A single amount spent once monthly is much easier to track than food, for example, which may take more self-control to manage.
Remember, it might take a little while to find a method that is best for you. Once you nail one down, it’ll help put you on a healthy financial path.
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