3 Simple Budgets to Try

Have no idea where to start and how to adopt a budget – read on and try one of these simple budgets. 

Budgeting may seem like a mindfield to some, but it doesn’t have to be. Most people see budgeting as restrictive and boring, I want to change this misconception. Budgeting is a great way to make sure you are spending money on things you actually value rather than getting to the end of the month having no idea where all your money went.

Below are three simple budgets to adopt to make sure you are getting the most out of your money.

Already got your budgeting down? Why not try a money saving challenge?

THE 50/30/20 RULE

This budget is the most simple and effective place to start. It splits your income into three categories and assigns an amount to be spent on each. 50% of your income on needs – including rent, bills, transportation and food. 30% to be spent on wants – things such as travel, subscriptions, clothes etc. Then the last 20% is to be saved. 

Adopting the 50/30/20 budget is a great place to start if you are struggling to save any money each month. It also allows for monthly spending without the guilt. 30% of your income is free to spend each month however you like.

This budgeting rule also works really well as a guide to how much you should spend in each category. Further, the percentages are completely adaptable, you could change it to 30% saving and 20% spending, or any other variation. The key thing is that you are saving a portion of your income every month.

ZERO-BASED BUDGETING

This is the budget that I follow and love! 

Essentially zero-based budgeting means giving every penny you earn a job. You will know exactly where every penny of your income is going and how you will be spending it.  

Go through previous bank statements and look at how much you spend on each category (e.g. food, eating out, subscriptions). From this you will be able to allocate a budget to each area – a certain amount you can spend each month. 

This form of budgeting is also great for creating sinking funds. A sinking fund is where you cash flow big expenses that often only come up once or twice a year – such as car insurance, christmas or a holiday. Figure out how much each is then divide by the amount of months until you need to pay for it.

Example: Christmas 

Say you spend £500 on Christmas – if you start saving in January and want to have all the money by the end of November, you will need to save £45.46 a month. 

This then becomes a line in your budget.

You’ll want to write down everything you spend money on in a month – rent, bills, subscriptions, any sinking fund contributions, food budget, etc. Add this all together and the remainder should be saved – it should in the end, equal zero – hence being called zero based budgeting.  

80/20 BUDGET

Finally, this is another simple budget to put in place, one that doesn’t take a lot of time or effort. It’s similar to the 50/30/20 rule although it provides more spending freedom.

Put simply the 80/20 rule is where you save 20% of your income as soon as you are paid then you can spend the other 80% as you wish. This is a great budgeting rule for people living in a place with a high cost of living, where often they will be spending a huge portion of income on rent.

These are the three easiest and simple budgets to adopt, hopefully you will find one that fits your situation. 

Do you have a different budgeting technique that you love? I would love to hear about it!