Make It to the Bottom of Your Bucket List With These 4 Budgeting Strategies

a year ago   •   4 min read

By Klivvr

If you’re like most people, odds are you will have made it to the middle of the month only to find that you have run through most of your paycheck. By the end of the month, you will most probably look back and have no idea where your money went.

You sit down and think: is it all my monthly subscriptions? Do I really need to go to the gym? What if I pack my lunch to work every day?

While these can help you cut some corners, they're not a sustainable way of managing your expenses in the long term.

We know saving does not come naturally to everyone, but luckily, it doesn’t take much time to learn a trick or two that could make things work for you.

This blog post will share four budgeting strategies that could make a real difference in your day-to-day life and your long-term financial well-being.

Round it Down to Zero with the Zero-Based Budget

If you’re just starting out, the Zero-Based Budget is by far the easiest to apply because it comes close to what one would naturally do on a limited paycheck.

The idea is simple - you take out your basic expenses from your monthly income, and the rest goes to fund whatever is most pressing that month, thereby taking you down to zero.

Zero-based budgeting closes the loop on cost, activity and output

To apply this budgeting strategy, you start by breaking down your expenses into several categories. The main categories can include basics like food, rent, utilities, and transportation.

Next, you assign the remainder to the category that needs it most. That could be paying your friend back, adding to your retirement savings, or even buying that big screen TV you had your eyes on.
And to your surprise, most months will not round you down to the big scary O, but rather to a nice little sum that is entirely free of attachment and responsibilities, to do with as you please.

Master The Art of Waiting With The 30-Day Rule

When it comes to ease of adoption, the 30-Day Rule is a close second.

It goes like this - whenever you want to purchase a new iPhone or a fancy pair of Prada shoes, don’t buy them right away. Instead, write them down somewhere and forget about them for 30 days; then, if you still want those items (and you can afford them), go back and get them.

By waiting for 30 days before you jump into an impulse purchase, you give yourself time to really evaluate your needs and understand where that new item fits in with your other, often more immediate, expenses.

Get To The Bottom of Things With The 60% Solution

It may sound complicated, we know, but the 60% Solution is actually a straightforward answer to the pressing question of how to go about saving in your day-to-day life.

It starts with understanding your overhead expenses - basically the daily essentials that help you get by. These can include your household expenses, utility bills, internet, food, and transportation.

Once you have those down to a tee, you assign up to 60% of your income to those expenses.

The remaining 40% gets divided into four chunks of 10% each:

10% on Retirement Savings - at the beginning of each month, imagine your old self on a beach somewhere and put 10%n away towards that goal.

10% on Long-Term Savings – 10% of your monthly income should go towards that which gives back on the long term.

10% on Short-Term Savings – your short-term savings will cover your holidays, repairs, new appliances, or gifts to loved ones.

10% on Fun And Entertainment – no savings plan should go without a little bit for entertainment, and indeed no budget plan lasts if entertainment is not accounted for. Here you can splurge on your Netflix and Amazon Prime subscriptions and take yourself out to dinner on the weekend.

Mix Things Up With The 50/30/20 Rule

Unlike the other budgeting strategies, the 50/30/20 Rule requires a clear understanding of your monthly expenses and where they fit into the larger scale of things.

For the first few months, it may be hard to draw the line between something as simple as needs and wants, but with a bit of honesty and self-reflection, this saving practice can go a long way toward enhancing your financial well-being.

To apply this budgeting strategy, allocate:

50% of your budget to needs. Your needs are the things you need to survive. That includes housing expenses, car payments, insurance, utilities, transportation, and groceries.

30% of your budget to wants. Your wants are different from your needs in that they are based on what you desire. This will include feel-good purchases, monthly entertainment subscriptions, restaurant outings, and overall entertainment.

20% of your budget to savings. Once you’re done paying for the previous two, the last one goes towards your future. That may not necessarily mean retirement, but all those things that lie just a little further down the horizon than we can see while we’re still at shore.

By sticking to the 50/30/20 Rule, you ensure that all aspects of your life are accounted for, with no surprises to catch you off guard in the middle of the month.

Abide by those budgeting strategies, and you’ll feel the difference in a few months’ time and move a little closer to financial well-being.

Do you have more tricks up your sleeve?

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