There is no doubt that people greatly differ in how they handle their finances. Some people’s plan revolves around paying all their bills using whatever forms of payment they have. There are people who make sure that they never spend more than what is in their bank accounts in cash. Then there are those accountant types who actually enjoy crunching numbers. What about extreme penny pinchers who live to get as much stuff for no cost or as low-cost as possible. Having a plan is great. There comes a time when you have to put some organization behind your planning and that’s where a budget is born.
A REAL budget puts you in control of your money, your spending and your saving. If you are ready to take control of your financial situation but just aren’t sure where to start or what is the right budgeting approach for you, check out these 6 budgeting systems from some of the thriftiest people I know.
1. Cash Envelopes
I believe that the cash envelopes system is by far the most basic way to budget. You don’t need spreadsheets.You don’t need software. You just need to write down each month how much you make and then decide how you are going to spend that money.
Create an envelope for each area of your life that needs money and slide the cash needed to cover those expenses into a physical envelope of some kind. If you want a detailed run down of how this system works, check out my post The Quick Start Guide to the Cash Envelope System.
2. Divide and Conquer Method
My husband and I have fallen in love with the divide and conquer method. We live on one income and my husband is salaried. We know exactly how much money is coming in two times a month. Two times a month we sit down and “spend” all the money that we anticipate he will make for the month. Every dollar goes into a category of life whether it’s an expense or savings. Check out how to get started on the system we like to use, including free printables on my post Budgeting 101: How to Start Bossing Your Money Around.
3. Irregular Income Budgeting
Do you work an hourly or non-salaried position? You might think that budgeting just can’t happen for you but Kalyn from Creative Savings has a great guide to budgeting when you have an irregular income. Check out all her advice in her post, How To Budget On Irregular Income.
4. The 50/30/20 Budget for People Looking For Balance
My other friend Jessi Fearon at The Budget Mama wrote this really great post on having a budget that is easy to understand. It breaks budgeting down into 3 simple divisions. If you can remember the 50/20/30 rule, you can easily go through and budget using really easy percentages of income. It takes care of several areas that people often to forget to budget for in a very simple way. If you want a well-rounded, balanced budgeting system take a look at her post, The 50/20/30 Budget.
5. Slow and Steady
If you like to take things step by step and prefer to ease into the idea of budgeting and saving, you’ll want to check out 8 Weeks To a Better Budget by Ruth Soukup from Living Well Spending Less. She has 8 lessons that guide you into improving your financial situation. This system is great if you really want to learn about budgeting and saving in manageable chunks over an 8 week time period (or less if you’re an over achiever type).
6. The Total Money Makeover
Dave Ramsey knows about budgeting the right way. If you want to really sink your teeth into budgeting, pay off debts and pursue financial freedom, then you need to get your hands on Dave Ramsey’s book The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness. I would call this book a catalyst to many family’s financial freedom including my own. I highly recommend that you check it out from your local library or get an inexpensive copy for yourself from Amazon.
Please feel free to share any systems or ideas that have helped you or things that make it difficult for you to find the right budget in the comments section below.
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Our family uses a combo method. First, we have both fixed and variable incomes each month. I struggled for a long time on how to manage, but with a lot of effort we got ourselves a month ahead. I averaged our income and expenses from the prior 8 months and came up with an average. We then saved up that amount and put our October 2013 budget together by using the September income. We have done this for the whole year and it has made big changes to our lives. We combine this with using the envelope system for the categories we tend to overspend on. For us that was groceries, toiletries, clothing, entertainment and restaurants. We now save more and spend on our priorities!
Thanks for sharing your system with us!
Thanks for compiling all these great methods.. my husband and I are still trying to figure out what will work best for us so this is very helpful! Stopping by from Thrifty Thursday 🙂
Thanks Laura. My husband and I actually tried about 3 different systems before we found one that ultimately sticks. We use a double entry book keeping system but to explain that on the blog would take a whole series lol.
This is a great list. There are so many ways to budget and readers just need to find the right one for their situation and personality.
Stopping by from Thrifty Thursday.
Thanks for stopping in Kristia! I’m so glad you like the list. There are lots of ways to do it and I think success can be based on your personality. Finding the right fit helps you stick with it.
Thank you for the link love! I love how you share The Total Money Makeover – best book ever! 😉
It really is the best book ever and I loved your percentage approach!
Thanks so much for the link love, Kim! I love the point you make that everyone handles finances differently and there is really no one right way. It’s all about what works for you and your family!
Thanks for writing such awesome stuff that helps people! I think that there is a lot of info out there on budgeting but very few people who have advice on handling incomes that vary from month to month. Your advice is greatly needed!