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There is no one-size-fits-all method for budgeting. To be successful with your financial goals, it is integral that you find a budget that fits your needs. For example, it will be nearly impossible for you to go from buying lunch out every day, to limiting yourself to spend nothing on takeaway or restaurant food. Below are three different methods of budgeting to suit different personalities.



Pay Yourself First

This method is great for those who are already aware of their spending and where their money goes each month. It is also a great option for those who have a fluctuating income that isn't the same each week.

Step 1 - Automate savings and debt or mortgage payments

The first money to come out of your pay cheque each month will go into your savings account, or towards big payments such as loans, mortgage, or debt owed. Once you have worked out how much needs to go towards these payments each fortnight, set up an automatic drawing system. This way, you won't have to think about these payments.

Step 2 - Pay regular bills

These bills will include things like electricity, groceries, any car payments, and other necessary expenses. Automating these bills will help you save time and energy paying them each month.

Step 3 - Decide what to do with the surplus

If you have a surplus of money after following these two steps, you can decide what you want to do with it. This might include treating yourself to a dinner out, or something new. It is also worth thinking about setting up some other funds for treats in the near future, such as a holiday or a home renovation.


Zero Based Budget

This method is a little more strict than the first, and can be a good starting point for those who wish to kickstart their savings. This method is good if your income is the same month to month. The basis of this method is that, before your income enters your bank account, you will have a plan for every dollar.

Step 1 - Add up your income and expenses

Figure out exactly what your monthly income is, then calculate your monthly expenses. Start with your fixed expenses, then list all the other costs that can vary month to month, and make a safe estimate. These expenses will include optional costs, such as entertainment, like a fortnightly restaurant dinner, and a Netflix subscription.

Step 2 - Allot your entire income to expenses and savings

This budget is based on you having no money at the end of allotting your expenses. This will mean that any leftover you have after accounting for all your expenses will go to non-negotiable savings.



The 50/20/30 Method

This method is useful for people who prefer to have hard rules to follow. It can be useful for those who have the tendency to overspend. This method is carried out by simply dividing your expenses into three categories:

  • 50% for necessary costs such as housing, transportation, utilities, and groceries
  • 20% for savings and debt repayment
  • 30% for lifestyle choices including entertainment, internet and phone bills, subscription services etc.

These three methods are great to use as starting points for saving plans. Once you begin to use one, you will be able to alter it to best suit your needs.

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