Growing up is nothing like you had expected. Bills pile up on the counter and you may have found yourself, on more than one occasion, eating ramen for three days straight as you waited for your next paycheck to arrive. Adulting is hard, but it doesn't have to be.
Budgeting your money the right way can save you from a lot of financial headaches and provide you with a sufficient safety net in case of emergency. Maybe your car needs to be repaired or your pet needs an expensive surgery, but either way, you should feel prepared. Keep reading to learn about ten different budgeting methods so you can become the adult you were meant to be!
10 LINE-ITEM BUDGET
This is an old-fashioned budgeting method, but one that has proven its worth time and time again. It basically shows you how much you spend on specific items or at certain places each month, on top of your bills. You write down each expense as you incur it within this book, so the next time you walk by a super cute pair of heels you won't be as tempted to buy them. This method makes budgeting a part of your daily thoughts, as you learn how to be frugal with your earnings.
9 PROPORTIONAL BUDGET
Proportional budgeting splits your pay into percentages, to help you become more financially stable. Your money is divided up into three categories: 50% needs, 30% wants, and 20% savings. It helps you create an emergency fund, but still allows room for you to have fun. The biggest chunk goes to needs because it includes all of your monthly recurring expenses, like your house or car payments. Using this method will help you get closer to becoming debt free, as you learn to save and learn about financial control.
8 PAY YOURSELF FIRST
This means the exact opposite of what you are probably thinking. No, do not buy the expensive pool table for your living room with your first paycheck of the month, but rather, set the money aside until the end of the month in case you find yourself in financial trouble.
This method saves people especially prone to spending their final monthly days living off of a total of five dollars. You can still buy the pool table eventually but just wait until the end of the month to see if you can still afford it.
7 ENVELOPE METHOD
The envelope method involves pulling cash out of your account on payday and separating it into dollar amounts for each category, which includes things like food, gas, entertainment, clothes, and etcetera. People tend to overspend in these areas, but pulling out the physical cash keeps you within a budget and prevents you from blowing all of your food money at the bowling alley. This method is comparable to the line-item method, but it's better if you tend to forget to write down your expenses.
6 ZERO-SUM BUDGET
This method is based on ending up with zero dollars at the end of every paycheck. You divide the cash among your payments and set aside money for food and other things, but you take everything leftover and put it into a savings account or towards paying off a credit card. This method is perfect for individuals who tend to use their extra cash to buy things they don't need, like the expensive dress with the price tag on it still hanging in your closet. Using this method will drive you to be the best adult you can be.
5 SPEND BASED ON VALUES
The value-based budget is perfect for individuals who already understand the beauty of being frugal. You may have a stack of cash sitting in your drawer or a decent savings account, but there may be a possibility for you to save even more. Putting a name to a fund can help you strive to be more careful with your money. You can put a portion of your extra savings into an envelope so you can take the trip of your dreams or save up for the new car you have always wanted. The possibilities are open and endless, allowing you a special sort of freedom when it comes to your money.
4 60% BUDGET
The 60% budget is exactly as it sounds, where this percentage of your pay is put towards committed expenses. A committed expense is things like car loans, house payments, cable bills, and credit card balances.
This method is geared towards people who aim to become debt free, as they put a set amount of money towards their outstanding bills. It requires less work to track payments than other methods but is still a suitable way to take you to an adult financial level.
3 THE SUB-SAVINGS ACCOUNTS METHOD
The sub-savings method is tricky and requires a large commitment. It has you open several savings accounts which are dedicated to a specific bill. You may have one for your house payment, one for food, another to pay off your new furniture, and so on. You can take your paychecks and have them split into these different accounts based on a percentage or transfer a specific amount each month to each specific one. It is a method open to interpretation, but it will take your adulting skills to the next level.
2 APPS TAKE ADVANTAGE OF YOUR SPARE CHANGE
This may not necessarily be a way to budget your money, but it can definitely help you create the emergency fund you have been struggling to build. There are apps which connect to your bank account and round up to the dollar for every purchase you make. This spare change can either be invested into a stock portfolio or placed into a savings account. Depending on what you hope to gain from the experience determines the type of app you might download, but it is a subconscious way of saving.
1 DIY (COMBINATION) BUDGET
This budget is a DIY sort of deal, where you can take the bits and pieces of other budgets and turn them into an incredible budget to fit your needs. For example, you might take the 60% budget, but combine it with the envelope method by taking out the remaining 30% in cash, splitting it among your remaining wants and needs. These budget methods are just a basis to get you started, but everyone's situation is different and so are people's personalities.