Sticking to a budget isn’t easy. If it were, there wouldn’t be so many of us wondering where all our money goes at the end of the month.
But if you want to be the master of your cash flow, a budget is the way to go.
Here’s some budgeting advice to keep in mind on your journey to a better financial life.
1. There’s No Right Way to Budget
Your older brother uses a spreadsheet to track his spending. Your best friend has an app linked to her bank account. Your coworker is committed to paying cash for practically everything.
One approach is no better than another. There’s no one-size-fits-all standard when it comes to budgeting. It’s all about what works best for the individual.
Some budgeting methods you might consider are:
- The zero-based budget: Planning out how you’ll spend (or save) every dollar you have.
- The 50-30-20 rule: Allocating 50% of your paycheck to the necessities, 30% for fun stuff and 20% for saving and financial goals. (Or you could tweak the percentages so it’s more like 60-20-20.)
- The cash envelope system: Using envelopes filled with cash for various categories, like clothing or entertainment, to restrict overspending.
- The half payment method: Splitting the cost of your fixed bills in two so one paycheck covers half your expenses and the next check covers the other half.
- The calendar budget: Planning out your upcoming expenses using a calendar.
There are also various ways to implement how you manage your money. You could lean on technology and use a budgeting app. You could create a spreadsheet in Excel or download a free budget template. Or you could embrace pen and paper and use a budget binder or bullet journal.
2. If At First You Don’t Succeed, Try Again
You can start budgeting with the best intentions… only to have it not work out.
Kumiko Love studied finance in college and went on to work in the financial industry, but she failed time after time when creating a personal budget for herself. Though she felt frustrated and depressed, she didn’t give up.
Love kept at it and took different elements of budgeting methods she had tried to create her own money management system. She’s now made a career for herself sharing budgeting advice online as The Budget Mom.
Budgeting often involves some trial and error. Adjust your spending limits. Try a different method. Test out a new app.
If you’ve hit a rough patch, these steps to budgeting will get you on track to managing your money in just one week.
FROM THE BUDGETING FORUM
3. You Don’t Have to Budget for the Whole Month
Most budgeting advice assumes you set a budget at the beginning of the month to manage your income and expenses throughout the following 30 days. But that’s just one approach.
You could choose to create a budget for each paycheck instead. Or if you’re more of a big-picture person, you could make a quarterly or annual budget.
You also don’t want to forget about one-time budgets to manage expenses for an upcoming occasion or life event. Create a wedding budget to wrangle all the costs involved with getting married or a baby budget before welcoming a little bundle of joy.
4. You Can Budget Even If You Don’t Get Paid Regularly
Budgeting is not just for folks who get paid the same amount of money every two weeks. If you get paid by the job, or if your paycheck varies based on how many hours you’re scheduled, you just need to take a few extra steps.
When you budget with variable income, you need to calculate how much money you bring in on average. This will help you determine what you can afford to spend every month.
When you make more than average, put the extra money in a sinking fund, so that you can pull from those savings in times when you earn less.
For other relevant budgeting advice, learn how one writer budgets as a freelancer and how a former bartender saves money while relying on cash tips.
5. Budgeting Isn’t Just For People Living Paycheck to Paycheck
When money’s tight, sticking to a budget can ensure you don’t run out of funds before the end of the month. But budgeting can still help you reach your goals if you have a more abundant cash flow.
It’s easy to spend money (especially on impulse buys) rather than being disciplined about saving. Set up your budget so that you essentially pay yourself first, and you’ll have money set aside before you have the chance to spend it.
Two easy ways to make this happen: Direct a portion of your paycheck to go into a savings account or schedule a transfer from your checking account to your savings account after you get paid.
Budgeting can also help you prioritize spending on the stuff that makes you happy. By including a budget category for fun money, you’re making sure you can afford to pursue what brings you joy, like traveling or going to concerts.
See, budgeting isn’t all about the boring stuff.
Nicole Dow is a senior writer at The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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