What is the simplest budgeting method for beginners?
Here's an easy one: Divide your income into three buckets are needs, savings, and wants. First, pay your bills. Next, allocate some amount to savings. Then assign yourself a realistic amount for discretionary spending. You can keep a notebook, use a spreadsheet, or just check in with your bank account weekly. Whichever you choose, the important part is picking the system that works best for you and sticking with it.
A simple budget for beginners
The simplest way to start budgeting is to split your money into three buckets:
- Essentials: housing, utilities, food, transportation, insurance, minimum debt payments, and other essential expenses.
- Financial Goals: an emergency fund, scheduled annual expenses, retirement contributions or additional debt payments.
- Flexible spending restaurants, entertainment, shopping, hobbies and other expenses that might vary month to month.
Begin by writing down the amount of income you expect to bring in during the month. Next, list out all the bills you need to pay and the cost of each one. After that, include the amount you wish to save or invest. What remains is available for discretionary spending.
If your income varies month to month, plan your initial budget based on what you think is a minimum income. You'll be able to determine what you do with the extra money.
There is no need to apply a perfect percentage to each category. You don't have the same housing costs, family situation, debt or income as anyone else. The budget has to cover your required expenses, contribute to your priorities, and still leave money for everyday living.
Pick a simple method to track your budget. Maybe you'll look at your bank account every Sunday, or keep a simple spreadsheet, or have separate accounts for different spending categories. When you do check your budget, compare your balance with what you owe and what you plan on spending before payday.
By the end of the month, you can see what is too high or low. Tweak one or two of these categories for the following month. A budget becomes useful through small corrections over time, rather than being perfect right from the start.