It is essential to budget the easy way and save money. We all know budgeting is essential for meeting our financial goals. Budget can easily find leaks where the money is going. There are many ways to budget and it depends on your own financial goals and financial condition to see which one is good for you.
Budget the easy way and save money
There is no right or wrong way to budget, whatever system you chose, just do it consistently. Normally as with exercise and weight loss programs, we start with enthusiasm and then stop after some time. While done consistently and deliberately, it makes you save a good amount of money in the long run.
The main goal of budgeting is to save money as well as have enough for your basic needs. It is not a difficult but you need to have a plan as well as be patient and determined . There is a lovely quote and my all time favourite :
” Money grows on the tree of persistence “
In this digital world, there are so many budgeting apps and tools but I still love to budget the old way with pen and paper.
1. Traditional budgeting
Most of the people take this approach of budgeting. Here first all the expenses are calculated and then whatever is left is saved. What I found in this method is that you never have money to save. I mean there are so many things to buy and do that all your money flies.
Few years ago, one of my friend asked to go to some place and I refused because I didn’t had money.
She asked me ” What do you do with your salary” ?
I said ” Nothing, it just always fly”.
Her next question was so funny, ” Do you get salary with wings which flies so fast ? And she asked me to do think about where it goes and see where you can put a barricade for money flow. My mother told me about traditional budgeting but I was unable to figure out what I was doing. Gradually I learned the process of budgeting and saving money.
Some people are good with traditional budgeting but it is bit difficult for new generations. I mean my mother was so strict with budget that she would always say, she is not left with any money.
2. Reverse budgeting
In Reverse budgeting system, you need to set savings goal and then save that money and spend what is left after. If you feel like This is really good because here you pay yourself first then you start with all other needs to spend. Reverse budgeting is good to budget easy way and save money every month.
It is like paying yourself first and then arranging the leftover money according to your needs.
3. Balanced Money formula
Balanced money formula is a budget planning framework outlined by Elizabeth Warren and Amelia Warren Tyagi in the book ‘ All your Worth ‘. According to this formula,
50 % of your income should go for your needs
30% for your wants and no less than
20 % into savings
This will urge you to keep your needs and wants under control so that you will have at least 20% of your after tax income to save.
Which budget system is for you ?
It really depends on you which one you like. Or you may try with each budget system and see what works for you and your household. You may find a midway between two systems.
For budget to work every month, it is important to stick to it and be patient. You will notice the rewards after few years. It is important to have financial goals and work on them. Planning your budget will definitely help you in accomplishing your financial goals.
Tackle your debt first to budget the easy way and save money
Now as you have figured out which method is good for you , it is time to tackle your debt first. Before automating money towards savings, it is important to tackle any high interest rate debt first. Make a goal to pay off debt and plan accordingly. Mortgage is not included in this debt plan. It just includes the high interest rate debt such as credit card debt.
After eliminating your bad debt, start saving according to your budget and plan.
There are few good budgeting apps that you can use to budget and save money in the process.
- Mint : Mint has been around since some time and is considered a really good budgeting app. You can connect your bank accounts with this app which can help in getting a personalised budget.
- YNAB ( You need a budget ) : I love this app because it gives free classes to learn how to budget. It takes bit simpler approach in budgeting your money. It helps in keeping money for unexpected emergency expenditures.
- Goodbudget : Goodbudget is really good for couples who like to the envelope budgeting system. It takes the same approach digitally.
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