Budgeting is often viewed as a restrictive and disciplined practice—one that involves deprivation and not a whole lot of fun. But it doesn’t actually have to be such a fear-inducing task. If you’re able to find a budget style that aligns with your lifestyle and are willing to harness a positive mindset, you can stay on course with your financial goals for 2024.
Read on to learn about three non-daunting budgeting techniques.
The 50/30/20 Method
The 50/30/20 rule is about as simple as a budgeting method can get, which makes it ideal for those who are looking for the most boiled-down version possible. It’s suitable for all, whether you’re a beginner or a self-proclaimed financial guru. Essentially, it involves allocating your income into three primary categories: 50% for essential expenses (housing, food, and transportation), 30% for discretionary spending (dining out and entertainment), and 20% towards savings and paying off debts (retirement savings or loan repayments). There’s plenty of wiggle room with this method, which is why so many people opt to go this route when choosing a budgeting technique.
Zero-Sum Budgeting
This method operates on the principle of assigning a specific role to every dollar you earn. Using the income from the previous month, you plan your current month’s budget so that your income equals your expenses. For instance, if your income in January is $2,500, you should allocate all of that for your February budget. This strategy eliminates the possibility of having unallocated funds roll over, which might be spent frivolously. It’s particularly satisfying for those who appreciate meticulous organization. The only downfall is that it’s a bit more high maintenance because it requires regular adjustment, especially if your income or expenses fluctuate from month to month.
Line-Item Budgeting
The devil is in the details, as they say, and this method stands by that belief. This method involves a deep dive into your personal finances, so be prepared to leave no stone unturned. You’ll be required to categorize your expenses into specific areas like housing, hobbies, and health. From there, you’ll assign a specific amount to each item within these categories. If you opt for this method, be sure to include your savings goals as distinct items in the budget so that they don’t accidentally fall by the wayside.
Adapting to Life’s Unpredictabilities
This much is certain: life is full of unexpected twists and turns that can disrupt even the most meticulous budgets. As you move through different phases of life, your priorities will inevitably evolve, and your budgeting strategy will need to follow suit. Continuously reassessing and adapting your budgeting strategy to align with your changing goals and circumstances is the key to keeping up with it and staying on track.
Michigan Mortgage Lender, Julie Krumholz – Superior National Bank
Saving for a house? Homeownership may be closer than you think.
Julie Krumholz from Superior National Bank has been helping homebuyers with different financial backgrounds reach their homeownership goals for over 30 years. She’s experienced nearly every facet of the mortgage industry, from processing, closing, loan origination, underwriting, QC auditing, and even co-owning a mortgage brokerage firm. Julie uses her knowledge to match homebuyers with the programs that fit their needs and helps streamline the homebuying process.
