How To Choose The Right Budget Method

Many of us want to save money but just don’t know How to Choose the Right Budget Method.

Saving money has been a part of everyday life for generations, with people finding all kinds of ways to stretch their dollars—sales, coupons, promo codes, and more.

But when it comes to a steady and sustainable way to save, budgeting is by far the most reliable.

But what is a budget?

A budget is a way to track and manage your money by setting goals for your spending.

These are the limits you set for your budget that you can’t go over.

Budgeting has become a must-have tool in most households and because of that more and more types of budgets have been created and new ways pop up all the time.

But they all go back to the same main purpose:  making sure you have financial stability.

With so many ways to budget to choose from, you may become overwhelmed.

The important thing is you find one that is quick and easy for you and that fits your lifestyle.

Anything hard or confusing will mean you’re going to be less likely to stick to it.

Sticking to it is very important, so be sure you find the right one that will work for you.

It can still be nerve-wracking and even a little intimidating when you first start looking for the right budget.

We’ve created this guide on how to choose the proper budget to make it easier for you to determine the right one for you.

How To Choose a Budget Method

When looking for the proper budget for you, there are a few things you need to consider.

For instance, you need to know what you want the main focus of your budget to be, is it for savings, to cut costs, or is it for something else entirely? 

Next, you need to know how much effort you want to put into this budget.

And finally, you need to look for a system you know that you can stick to. To do this, you need to be realistic. 

Use Your Phone 

There is an app for practically everything, from games to books, even money-saving apps, including budgeting.

There are a few budgeting apps to choose from, but most of them have the same premise.

All you have to do is link your bank account and set categories for what you want to spend money on.

Then select the amount you don’t want to go over. 

But if you get paid in cash or you prefer cash, you can either deposit it into your bank account, or there are some budgeting apps that let you add cash transactions or earnings.

One of my favorite apps that does this is Mint.

Another great thing about these apps is they will keep track of your spending in previous months and make charts for you to refer back to.

This method works best for people who don’t want to keep track of everything that comes in and goes out.

Because the app does that for you, all you’ll need to do is check it at least once a day. 

Make Most Of Every Penny

The Zero-based budgeting system is excellent for the person looking to spend every last penny of their income on their budget.

This may seem unproductive for a budget but having a purpose for every cent you earn is an excellent way not to waste your hard-earned money on something pointless. 

But this doesn’t mean you spend all your extra money after your monthly essentials on shopping.

You can use this money to pay off debt or build up savings for things like emergencies or a trip. 

For this method, you take your whole income and put it toward your expenses, savings and any debt.

So when you add up all of those and subtract that from your income, you get zero.

That’s where this type of budgeting gets its name.

Keep in mind your expenses, savings, and debt can be different each month with this type of budgeting.

Working With Cash 

The cash envelope budgeting method is for you if you’re looking for a cash system.

This budgeting system involves you labeling envelopes for each budget category and putting the set cash amount in each envelope.

Then when you go to buy, let’s say, groceries, you take the cash out. 

Whatever you don’t spend goes back in that envelope.

But if you want to go shopping and you’ve spent everything in that envelope, you don’t take money from another envelope,.

If you have any money left over at the end of the month in any of the envelopes, that money goes into your savings.

Wants Vs. Needs

The 50/30/20 budget is perfect for you if you’re looking to cut down on your wants and determine what your needs are while building up your savings or paying off debt. 

To master this system you’ll want to take 50% of your income after taxes and use this for your needs.

This is mainly for bills and food, but it can also be for memberships or anything else you need for that month. 

Then you take 30% of your income after taxes to be used for your wants.

Lastly, you take the last 20% of your income and it goes into savings and paying off any debt.

An alternative to this would be to follow the 80/20 budget. It’s very closely related to the 50/30/20, but you take 80% of your income after taxes and put it toward your needs instead of 50%.

Then take 20% for your wants instead of 30%. 

This system has no savings.

This sort of method works for people who want to cut their wants down but are not focused on adding to savings and debt.

Focus On Savings

The pay yourself first budgeting system is for people who want to build up their savings.

For this method, you decide how much of your income you want to put toward savings. 

Be sure you can afford that amount on top of your bills each month.

Then budget the rest of your money for your monthly expenses. 

If your main focus for a budget is to go on a trip or have a rainy day fund, the pay yourself first budget is what you need. 

With all of the budgets we just went over you should be able to find one that fits your lifestyle or fashion your own based on one of these.

Whatever you do, don’t put it off, start now or you might never do it and that is worse than trying one and having to move to another.

The stress and strain having a budget and sticking to it will save you is well worth the time and effort you put in to getting started and doing it. Good Luck!

More Budgeting Posts

• Household Budgeting Mistakes – Avoid every one of these Household Budget Mistakes if you want to really get your finances under control once and for all.
• How to Teach Your Kids Budgeting – If you want to know how teach your kids how to budget beyond the piggy bank, it is important to start having money conversations as early as possible.
• How Much Can You Save? – Whether you’re dreaming of a nice emergency fund, saving for your dream vacation, or just trying to get a handle on your budget, knowing how much to save each month is the first step.
• 15 Tips to Cut Monthly Expenses – Let’s explore some practical tips for cutting monthly expenses to get immediate savings.