Budgeting. It is not a one size fits all.

Budgeting. It is not a one size fits all.

If you’ve been a regular reader of the ThinkPink blog series, you should be well-versed on the importance of a budget. When it comes to saving money and having a plan, a budget is one of the best ways to take control of your finances and reach your financial goals. However, I’ve found that following through with a plan can be cumbersome and while there may be momentum in the beginning, eventually it fizzles out before a goal is even reached. Why is that?

Well, I like to compare budgeting to working out. Specifically, working out in January. The New Year rolls around and everyone gets this new zest for getting physically fit. Suddenly, everything is full: group classes like Zumba and Spin, every machine in the weight lifting section, and good luck finding a treadmill. Those are jammed by the people who have resolved to run a half marathon or bust. The gym looks like this for a couple of weeks. As you know, though, it will go back to how it was before the New Year. The reason: people lose their momentum when results are not seen quickly. That can be discouraging enough to steer people away. However, seeing results takes time and while one method of working out, like Zumba, could work for one person, it might not work for another.

So how does budgeting and working out compare? Like learning yoga or taking up a more extreme sport like CrossFit, budgeting is a practice. It requires patience, follow through and a fair amount of trial and error. If you’re struggling with seeing results from your budget, maybe it is because your budget doesn’t fit your lifestyle and needs. Like working out, budgeting is not a one-size-fits-all scenario. Everyone has their own unique habits, strengths and weaknesses so different types of budgets will work for different people. Creating one you don’t actually hate can make it easier to stick with!

Here are some different types of budgets:

1. All-Cash Diet: If you like strict rules and structure, this is the plan for you! Instead of using debit and credit cards, this budget strategy has you always pay for everyday purchases with cash. Use actual envelopes to represent each of your main spending categories (Rent, Debt, Food, etc.) then, at the beginning of each month, decide how much should go in each envelope to meet your needs. You pull out the cash when you’re making a purchase from said category and when the money is gone, it’s gone! You can’t dip into another envelope to make up for the shortfall. It’s a challenging budget but it works well for people who are really trying to pay down debt or curb their impulse purchases.
2. Zero-Based Budget: If the fear of the unknown makes you anxious, this could be the perfect budget for you! The idea behind this method is to give every dollar you have a purpose. You allocate all of your money to expenses, savings and debt payments. The goal of this budgeting method is to live off of last month’s income, NOT your current paycheck. Total the amount you made last month (and haven’t yet spent!). That’s what you get to live off of this month. Then this month’s income will be available to be spent next month. This ensures you always have at least one month’s income for emergencies at any given time!
3. The Paycheck Budget: If you really struggle to make your budget last throughout the month, try the paycheck budget! With this method, you break down your budget by paycheck by calendaring all of your monthly expenses and then assigning each dollar of your take-home pay to one of those expenses. For those who get paid every other week, you budget for every two weeks that you get paid. So some bills get paid from the first two weeks’ budget and some bills get paid from the last two weeks’ budget.

At the end of the day, your budget should fit your lifestyle. You may have to try several different methods until you find the one that is right for you. Don’t be afraid of a little trial and error! Remember, you are not tied down to one method of budgeting. There will be times you may have to adjust your plan or switch methods – that is okay! Nobody gets budgeting right the first time, so do your best and have fun with it!  

Free Tools & Trackers

As an MVCU member, you have access to free budgeting tools right inside your online banking that can help you work toward your financial goals!! Learn more in these short videos:

• Creating Budgets
• Creating Savings Goals

Create yours today!

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