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4 Budgeting Methods That Will Help You Manage Your Money

by Swapnil Porwal about a month ago in personal finance

Even if you don't have any experience these 4 methods will definitely guide you according to your financial condition

Created by Swapnil Porwal

Looking at your bank account balance and wondering where all your money has gone is annoying. Even worse is finding out all your money has been spent even within a week to go before payday.

You may be astonished by the amount of money you spend on meals, apparel, or even your child’s activities if you have counted all your receipts.

Maintaining a monthly budget will help you stay on top of your finances. Budgets prevent you from mis-financing your funds when they come in and when they go out.

The difficulty is that there isn't one straightforward approach to budgeting, as budget style varies considerably from person to person. Getting your finances in order, depends on your goals and how you prefer to track your finances.

In this post, I'll go over some popular budgeting techniques so that you can choose one that works for you.

1: The Zero-Based Budget

Zero-based budgets give a detailed plan based on your income, giving you a better grip on your cash flow.

What do you need for the Zero-based Budget?

A goal is to be able to save and invest at the same time to ensure your income minus expenses is zero each month.

The end of a month should be in balance, with no leftover money — and no expenditures that exceed income.

Get a decent understanding of your monthly expenditure on your monthly bills by analyzing your bank statements, credit card reports, and invoices to decide how much you spend within the budget categories relevant to your lifestyle.

Once you have determined your categories, allocate expenses to each. You may need to try a handful of numbers to get your expenses and incomes equal.

The following is an example of a budget that you might have:


Paycheck No. 1: $1,200

Paycheck No. 2: $1,800

Total income $3,000


Rent: $700

Utilities: $200

Mobile bill: $100

Internet: $90

Student loan: $200

Credit card debt: $150

Vehicle bill: $200

Insurance: $200

Groceries: $250

Gas: $100

Dining out: $200

Entertainment: $80

Gifts: $50

Personal care goods: $1 00

Gym membership: $60

Streaming services: $10

Cleaning supplies: $20

Clothing: $90

Savings: $200

Total expenses $3,000

How Do You Determine Whether a Zero-based Budget Is Right For You?

Zero-based budgeting was designed for budgeters who want to be intentionally hyper-aware of their finances.

You can learn where you lack in finances by making a budget – whether you are simply not earning enough money, or spending too much money in certain budget categories.

2: The 50/30/20 Method

How much should you spend on needs versus things you need? Have you ever wondered what percentage of your salary should go to improving your financial condition? The 50/30/20 budget may do the trick for you.

How to Budget Using the 50/30/20 Method

Make sure to divide up your income so that 50% of it goes to meeting necessary needs, 30% goes to purchasing what you really love and 20% goes towards meeting financial targets.

Take the situation where you make $3,000 a month. That is divided between $1,500 for necessities, $900 for whatever is desired, and $600 for financial objectives.

Here are some necessities to spend $1,500 on:





Phone bill

Minimum credit card fees

Student lending charges


Vehicle bill


Your budget should include $900 for the fun stuff:


Lunch and Dining


Date nights




Magazines and Newspaper

Sporting activities

With $600 leftover, you could spend it on:

Funds for emergencies

Savings for emergencies

Contributions to 401(k)s or IRAs

Savings plan for university students

Your credit cards may be charged additional fees

You don’t need to set out how much you will spend in each category when using the 50/30/20 formula.

As long as you stay within the established percentage brackets, it is not necessary to limit the amount you spend on groceries or dinners on date nights.

Although the exact 50/30/20 method might sound attractive, if you are unable to adhere to those numbers, you can still use that concept as a guide.

Does the 50/30/20 technique work for you?

For individuals who need advice in balancing saving, investing, and debt repayment, this technique is an exceptional method.

If you tend to overspend when you have discretionary money, this budget stays you under control without requiring you to give up anything.

In spite of this, 30% seems like a generous allocation to spend on fun.

3: Bare-Bones Budgeting

It's all about trimming the fat off the budget and coming up with a clear vision of what you need, not sacrificing what you need.

Bare-bones Budgeting Guide for Making Smarter Budgets

You can see the logic behind this method. A bare-bones budget is set up to ensure you don't spend more than what is necessary. Anything extra gets saved.

A typical budget may look like this:


Paycheck No. 1: $1,200

Paycheck No. 2: $1,800

Total income $3,000


Rent: $700

Utilities: $200

Mobile bill: $100

Internet: $90

Student loan: $200

Credit card debt: $150

Vehicle bill: $250

Insurance: $200

Groceries: $350

Gas: $200

Cleaning supplies: $20

Clothing: $90

Savings: $450

Total expenses $3,000

Do you need to use Bare-Bones Budgeting?

Budgeters who are trying to gain control over their budgeting or who probably have a debt to pay off can benefit from the bare-bones approach.

The bare-bones method is helpful for anyone needing to reset their spending. In addition, it can help those trying to make ends meet on a small income; or those who are striving to prioritize their finances.

4: 60% Solution

Of course, it’s wise to prioritize the essentials. But what about expenses we consider essential for our lives, neither crucial to our survival nor impractical to our plans? The 60% solution gives those expenditures value as well.

A budgeting strategy based on the 60% solution

60% solution is very similar to the 50/30/20 method, but there are some differences. You are committing 60% of your income to your committed expenses when you budget 60% of your income.

Your essential spending expenditures are not included in that amount. They include the specific expenditures that are most important to you, such as your kids’ activities, your training costs, or your membership fees to a professional organization.

Your leftover 40% may be utilized for savings or a bit of discretionary expenditure.

Financial Author Richard Jenkins came up with the 60% solution in stages, where he divided his 40% savings into four amounts of 10% each: retirement, long-term savings, short-term savings, and fun money”.

Using the 60% solution, here’s an example:


Paycheck No. 1: $1,200

Paycheck No. 2: $1,800

Total income $3,000


Committed expenses (60%):

Rent: $700

Utilities: $150

Mobile bill: $100

Internet: $90

Student loan: $200

Credit card debt: $90

Insurance: $90

Groceries: $250

Gas: $80

Personal trainer: $100

Cooking lessons: $100

Other expenses (40%):

Retirement savings: $300

Long-term savings: $300

Short-term savings: $200

Fun money: $250

Total expenses $3,000

Can you feel comfortable with the 60% Solution?

60% is ideal for people who want to prioritize unimportant spending and who do not wish to track every dollar. It also makes budgeting easier for those who do not wish to be too rigid.

A Method for Choosing the Best Budget

You should now understand the differences between various budgeting techniques, so you can select the one that applies best to your financial condition.

The technique you select relies on how serious you are about maintaining track of your spending. Do you need to maintain tabs on every dollar or take a broad look at where your money is going?

The information I have provided you here in this article might help you in your decisions regarding how to make a budget for your money.

This is one of my longest articles. I hope you like it.

You can also connect with me on Twitter by swapnilporwal8

personal finance
Swapnil Porwal
Swapnil Porwal
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