Budgeting methods. What suits me?

Budgeting methods. What suits me?

When you have distinguished your needs from your desires, you have already set priorities and goals and you know your income, it is time to record everything and fix your budget. Like all procedures, the budget has several methods that you can follow. Here are some of the most common methods to check how they fit your style:

  • Zero-based budget:

The central idea is simple. Spend the amount of income you have and in the end the balance (your difference) will be zero. It is an ideal method for those who have a stable income (monthly or weekly), their expenses are about as much as their income and they cannot or do not want to save. 

  • I pay myself first budget: 

It focuses on repaying debts and trying to save. According to this method, first you calculate an amount for saving or repaying debts and the balance that will remain will be used for your expenses.

  • Envelope system budget: 

It is very similar to the zero-based budget with a big difference. You use specific folders (real or digital) where you have budgeted and placed the corresponding money per category. For example, in the folder for entertainment you may have put 50 euros. When you spend them you will know that you will not be able to spend any more.

  • The 50/30/20 budget: 

Another fairly simple idea. You divide your expenses into three major categories: 

  1. Necessary expenses (50%)
  2. Remaining non-essential expenses (30%)
  3. Saving and repaying debts (20%)

It is an ideal method for those who first start recording their budget because it gives them a basic orientation. Of course the percentages can be changed depending on your needs.

Which method would you choose? Think about your needs and goals, try the different methods and step by step you may end up with one of the proposed ones or another method that you will shape yourself  and which you will be able to follow consistently.