The values-based budget prioritizes you over the numbers in your budget. Values-based Budget Vote With Your Dollars For example, if you’re trying to reduce how much you spend on restaurant meals, use the envelope method for your restaurant budget category. This method also works well in combination with other budgeting methods. This method is ideal for anyone hitting the reset button on their finances because it sets hard limits on spending while also eliminating the risk of checking account overdrafts or carrying a credit card balance.
With this system, your budget categories are represented by envelopes. The envelope budget is a tried-and-true cash-based budgeting system that has helped many people smash debt and curb bad spending habits.
Budget planning system free#
Make your own 50/30/20 budget with this free template →.Regardless of the budgeting method you use, it can be helpful to figure out how your spending and saving percentages measure up to the 50/30/20 ratio. This method is ideal for those concerned with big-picture financial information because it considerably limits the number of budget categories you have to contend with.
However, keep in mind that the combined percentage for essentials and personal expenses should not exceed 80%. If you use this method, you may find that a slightly different ratio works best for your financial situation. The 50/30/20 budget is based on personal finance “rules of thumb.” The idea is that if you allocate 50% of your income to essentials (like housing, bills, food), 30% to personal expenses (like eating out, travel, personal care items), and 20% to savings, you will automatically limit major expenses while still saving enough to be financially secure. 50/30/20 Budget Financial Snapshot Spreadsheet – even looks like a snapshot. It’s also a great tool for folks just learning to budget as it provides the most detailed financial data of any of the other methods on this list.
This method is ideal for anyone who prefers a hands-on approach to budgeting. This method forces you to spend time each month creating a detailed plan for your spending and savings in the coming month, which naturally prepares your budget for increases in spending that occur around events such as holidays, wedding season, and back to school. If you don’t use all the dollars assigned to a specific category, then the funds can be rolled over to a different category. With a zero-based budget, every dollar is assigned to a budget category, such as transportation or retirement savings. Read: 5 Tips for Choosing Your Most Effective Budget Categories Zero-based Budget There are many different budget methods, but the top five recommended budgeting strategies are: Creating a budget is a personal finance topic everyone loves to hate.īut budgeting doesn’t have to be tedious or time-consuming if you choose the budgeting method that aligns with your unique financial situation and goals.
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