The reason for a budget is to have a plan for your money. A budget will help you achieve your financial goals. It helps you get a visual of your income verses your expenses to determine if you are living above or under your means. There are different methods you can use to budget your money.
1. Traditional/ monthly budget On a chart you list all your income and all your expenses for the mouth. Then you minus your expenses from your income. Hopefully you’re earning more than you spend. Then you set spending goals for each category. 2. Percentage-Based Budgeting 50/30/20 50% of income to be spent on needs 30% of income to spent on wants 20% of income to be reserved on savings
80/20 This is also known as the Pay Yourself First budgeting method. You take your savings off the top and spend the remaining 80% freely. The beauty of this budget is that once your savings are cared for, you don’t need to worry about where the rest of your money is going.
Zero based budgeting – you assign ever dollar to something, every dollar has a job. This doesn’t mean you have to zero out your checking account. Make sure you have a cushion to be safe.