The envelope method is one of the simplest budgeting methods. YNAB costs $5 per month after a free trial. YNAB is more of a service than just an app, with video lessons, podcasts, and a support team to help with questions. There’s an app for that: You Need a Budget is designed for zero-based budgeting. That way, you never overspend in any one category (say buying clothes) because you know what your limit is. If you have money left over, you give it something to do-even if that’s dedicating it to a “fun money” category or saving a little extra. The trick to pulling off this budgeting method is to have a plan for every dollar you earn. Once you’ve got your expense categories set up, assign portions of your income to cover those categories. Finally, create additional “expenses” that will improve your finances, like retirement savings, debt repayment, or an emergency fund. ![]() ![]() Then list all your typical expenses, including irregular expenses (you can create a “buffer” category to handle those, just divide the cost of the expense by the months you have to set aside funds for it). To get started, add up all your income-this is what you have to work with each month. The idea behind zero-based budgeting is to have a plan for every penny of income you earn, eliminating the problem of never knowing where your money goes. There are plenty of budgeting methods to choose from, but we’ve detailed some tried-and-true approaches below. Once you understand your current spending habits, make a plan. Create a “Miscellaneous” category to track small purchases that don’t fit into your everyday spending. For example, if you subscribe to multiple streaming services, those can be simply grouped under “Entertainment” or “Subscriptions.” Food expenses can be broken down into “Groceries” and “Eating Out,” don’t worry about tracking things like takeout versus drive-thru unless it’s going to help clarify some spending patterns for you. At some point, it’s best to just group things together. Getting too granular will make budgeting more of a chore, which in turn, makes it less likely to happen. There’s a delicate balance between knowing absolutely nothing about your spending and knowing too much. Going more detailed with your categories (and tracking) can give you an even better snapshot of your spending habits-up to a point. Occasional costs like vehicle registration fees or your dog’s vet visits should be budgeted for, too. Create categories to keep track of everything you buy. ![]() ![]() Track your spending for at least one month to get a realistic picture of your finances.Īt a minimum, you need to know how much you earn after taxes and how much you spend on basics like housing, food, transportation, healthcare, and entertainment every month. To win at budgeting, you first need to know where your money goes. You’ve got plenty of different methods to choose from, and you can even mix and match, borrowing the best pieces from different strategies to create a budgeting style all your own. Budgeting isn’t a one-size-fits-all thing. If you’ve struggled to pull it off in the past, it’s possible you just haven’t found an approach that fits your personality and financial situation. Not knowing where your money is going is unorganized at best, and at worst ensures you’ll stay in debt and far away from your financial goals. Let’s face it, for most people, budgeting isn’t even interesting.
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