WHERE DO YOU START? Before you begin creating your budget, you need to assess your current financial situation and distinguish between your wants and needs. Once that’s done, you can use a basic budgeting worksheet; there are many free templates online. If you find that you cannot stick to your budget, it may mean the budget is not flexible enough. Take the time to review your budget plan until you find one that works best for you.
IS THERE AN APP FOR THAT? Not only are free budgeting templates available, but there has been a rise of budgeting apps. While these apps require a slight change in habit, they can be helpful in making sure you are sticking to your plan. The two most user-friendly picks are You Need a Budget (YNAB) and Mint. YNAB is designed to “help you break the paycheck-topaycheck cycle, get out of debt and save more money.” This app is available for free the first 34 days, and then there is a fee of either $11.99 per month or $84 per year. For those on a tighter budget, Mint is completely free and offers many ways to save and track your money. Sending overspending alerts, tracking spending by category and analyzing cash flow are all functions of this app.
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BUDGETING METHODS
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PAY YOURSELF FIRST
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ZERO-BASED
Unlike traditional budgeting, zero-based budgeting starts at zero, and justifies each individual expense for a period of time. This method starts from scratch, analyzing each granular need instead of incremental budgeting increases. While it may be timeconsuming, thinking about how each dollar is spent will result in a lot of savings.
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ENVELOPE SYSTEM
If you want to focus on savings and paying off debt, the payyourself-first budgeting method is for you. Every time you get paid, money is set aside for your savings and debts. The remaining funds can be spent on necessities and desires. This method is perfect for someone who struggles with saving money or doesn’t want to meticulously budget out each expense.
The envelope system budget is all about the cash. Planning your spending each month and then utilizing an envelope for each spending category are the main elements to this method. Those utilizing this system withdraw as much cash as necessary to fill each envelope based on their budget. Keep in mind that this method is not for those aren’t comfortable carrying cash.
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Getting to the point quickly is easiest using the 50/30/20 budget method. The idea is to break down expenses into three categories: 50% of your budget should be dedicated to needs like rent or groceries, 30% should be for wants like shopping and a night out and 20% to savings and debt payments. Excellent for beginners, this method doesn’t require reviewing all of your spending. However, it won’t work for someone drowning in debt or with big savings goals.
You can’t spend money that you don’t have, and that’s exactly what the ‘no’ budget method entails. Rather than creating a budget, one would keep an eye on their checking balance. Know when recurring bills hit your account so you can set aside cash. Spending what’s leftover is guilt free, since you won’t be overdrawing your account. This works for somebody who has a lot of discipline towards spending, since it only works when you say, “no.”
THE 50/30/20
THE ‘NO’
Summer 2021 DISTRACTION
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