Blog
Budgeting methods can vary based on an individual’s financial goals and preferences. Here are a few budgeting methods that may be effective in 2023:
- The 50/30/20 budget: This method involves dividing your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. Needs include expenses like housing, groceries, and insurance, while wants are discretionary expenses like entertainment and dining out.
- The envelope system: This method involves physically setting aside cash in labeled envelopes for each category of expenses. When the money in an envelope is gone, you know you’ve reached your budget for that category.
- Zero-sum budgeting: This method involves allocating every dollar of your income to a specific category of expenses or savings. At the end of the month, all of your income should be accounted for, with nothing left over.
- The value-based budget: This method involves prioritizing your expenses based on their importance to you, rather than their cost. You allocate your money to the most important categories first, and then to the less important categories if there is any money left over.
Ultimately, the best budgeting method for you will depend on your financial goals, spending habits, and personal preferences. It may be helpful to try out a few different methods to see which one works best for you. After my own trials, Zero-sum budgeting works for my family currently.