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01. Envelope System
This is my absolute favorite budgeting methods for beginners. It’s really simple to do – you put cash into envelopes and write down every time money goes in and when money goes out. The best part is it help to eliminate overspending! When your envelope is out of money you are out of money. Simple!
How it works
Each of your expenses gets separated into their own envelops – like groceries, gas, clothes, etc. Each month you get a limited amount that you can spend within each category. By using cash it helps cut down on overspending and you’re able to quickly look at how much you have.
How It’s Done
- Organize all your expenses into categories – Groceries, gas, clothes, going out/date, etc.
- Figure out your budget. Take your after tax income and subtract all your bills**, the remaining money is what will be divided up into your envelopes. You can put all your expenses in envelopes. When I was using this method, I put everything that I had to/ could pay with cash.
- Add money to your envelopes. Go to the bank, get your cash, and fill up your envelopes according to your budget. Do this every pay check. Don’t forget to record it.
- Spend wisely & record. Every time money goes in or out – write it down.
**Bills would be things like; rent/mortgage, insurance, utilities, power & gas, car payments, cell phone contacts, etc.
What You Need
Looking for some envelope budgeting tools? You can just use regular envelopes, just buy a cheap pack from the dollar store or Walmart. When I first started living on my own, I started using ones similar to these envelopes – just different patterns. I upgraded to one like this envelope system a year or two later – mainly because it was easier to carry everything. If you’re just starting – don’t invest a ton until you know this method works for you – plain white envelopes work just fine.
If you need to you may need to reassess your budget after a few months. Maybe you have too much allocated on gas and not enough on groceries. You wont keep your budget going if it’s unattainable.
02. Budget Planner
Basically, it’s just like any other planner but it’s just for money. My favorite part of these is that it helps you make savings plans and debt reduction plans. Which I find is lacking in the envelope method. HOWEVER, both the budget planner and the envelope method can be used together. It’s my favorite combination because the budget planner helps me with my savings and paying down the debt while the envelope method helps keep my spending in store to a minimum.
How it works
Budget planners work almost exactly how it sounds like it would work. They usually have a monthly budget page. Most include a savings and debt tracker. I wouldn’t even consider buying one without a savings and debt tracker – even a free one without is just a waste.
How It’s Done
- Start by gathering a list of all your incomes and expenses and enter them into the corresponding part of your budget planner.
- Record your savings goal balance, current balance, and monthly deposit amount onto your savings page.
- Record your debt information such as balance and monthly payoff amount
- Write down any money that comes or leaves on their corresponding pages.
What You Need
- Budget Planner
If you don’t want to use the paper and pen method, you can also create a budget planner with a spreadsheet program, like Excel, and manage it online. The benefit to this is its cleaner and you can rearrange, add, and makes as needed
Where do you get budget planners? You can find them on amazon, like this one or this one here. You can also google or pinterest “budget planner templates or printables”. Or you can make your own with a spreadsheet program like Excel.
Personally, I don’t like apps that try to help me out. The ONLY reason they don’t work for me is because I’m a massive procrastinator! For me, it’s way to easy to get distracted on my phone – games, social media, emails, etc. However, I know that for some people the are super helpful! And they have the added benefit that your phone is almost ALWAYS with you.
How it Works
Typically, you’d download an app. And enter all your information into it. They are usually similar to the budget planner. Some will hook straight up to you bank accounts. It really depends on what you’re looking for.
- EveryDollar. Has both
Free & Premium Versions.
- Mint. Free
- Buddy – Easy budgeting. Has both Free & Premium Versions. As far as I know it’s only on App Store.
Hopefully, one of these methods will help you get yourself on budget this year. Have you tried any of these budgeting methods – which is your favorite? Or do you plan on trying any of these?
PS: I have this awesome freebie library that you should check out & yes – it’s all free!